ACT April

APRIL 2013
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Interview:
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The mild-mannered
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Underwritten
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A compilation of
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Pensions
Long-term
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Arts
Alan Turing: beyond
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Planning a prosperous future for retirement
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APRIL 2013
MORE CONTENT ONLINE
Additional content can be
found at www.theactuary.com
26
WRITER OF THE MONTH
Nick Silver wins a 50 book token for his
interview with John Kay, courtesy of the Staple
Inn Actuarial Society
AT THE BACK
40 Arts
Sharon Maguire explores the life and
work of Alan Turing
43 Puzzles
Win a 50 Amazon voucher
44 Actuary of the future
Alex White of Redington
45 Student
Jessica Elkin prepares for the end of the
world or of her exams, at least
ONLINE
Underwritten annuities:
Back to the future
Stephen Lowe on the history and growth
of annuities, and potential opportunities
for the market
Staple Inn sundial
marks centenary
Sharon Maguire reports on the ceremony to
celebrate the 100-year anniversary of SIAS
MORE CONTENT ONLINE
Additional content can be found at
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FEATURES
19 Interview: John Kay
Nick Silver discovers why the author of
the Kay Review of UK equity markets
believes the current system is fated
24 Pensions: Living in the moment
Celene Lee and William Zimmern ask
if pension schemes get better results by
focusing on the present
Underwritten annuities
26 Healthy choice?
Billy Burrows oers an advisers
perspective on enhanced annuities
28 Of wealth and health
Dr Gordon Woo on human resilience
30 Outsmarting mortality
Daniel Ryan welcomes the integration of
medical and demographic knowledge
33 The gender angle
Jules Charrington looks at the eect of
the Test-Achats gender ruling on rating
34 Steering through the rapids
Peter Banthorpe discusses pricing
challenges for actuaries and underwriters
38 The forum
Five leading practitioners debate the
underwritten annuity market
UP FRONT
10 Profession news
14 Industry news
16 People/society news
18 SIAS events
OPINION
5 Editorial
Deepak Jobanputra sees a glimmer of
hope amid ongoing nancial volatility
6 Letters
History lessons and the perils of less-
than-critical critiques
7 Presidents comment
Philip Scott reviews the cross-practice
initiatives put forward by the enterprise
risk management committee
8 Soapbox
Michaela Koller reviews the measures
that insurers across Europe are taking in
tackling insurance fraud
42 Book review
Managing Fraud Risk: A Practical
GuideFor Directors And Managers
bySteve Giles
15
19 Our assessment of
mortality could
include positive factors
that sustain life and
make individuals
resilient. Depending on
these, the lifespan of two
similar individuals may
varysignicantly.
28
3 April 2013 THE ACTUARY
Contents
CHRIS DUNN
p03_apr_contents_SEMIFINALCT.indd 3 22/03/2013 11:26
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Contact: Roger Massey
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Tel: +44 7813 989 016
ACT.04.13.004.indd 4 22/03/2013 08:54
Editorial
Recent years have proved a rollercoaster ride for global markets. The
initial phase encompassed shock, headlines and punditry, and society
took an active interest in following the views of what was to come
next. More recently, however, we have become desensitised to new
developments. It seems we almost expect shock events to be the norm
and just shrug our shoulders. Is this a good or bad thing?
At the time of writing, the news of a tax on savings in Cyprus has the
potential to send jitters across the globe, yet equity markets in some
regions have been soaring. Clearly, a vast range of factors is at play and
there is good reason for this to be the case. Consumers will, however,
wish to seek out more stable outcomes and overall certainty for their
nancial planning. The current volatility makes this di cult, although
it is balanced to some degree by government and regulatory attempts
to ensure stability. These changes will hopefully bring about greater
condence among consumers, allowing insurers to provide valuable
nancial solutions to drive social good across the world.
An interesting insight from our interview with John
Kay was that actuaries should challenge their complex
nancial models and provide more narrative solutions,
using their skills to express subjective opinions. This, Im
sure, will drive positive debate as it raises a number of
complex questions.
Coming back to consumer solutions, we have a
range of features this month looking at the developing
underwritten annuity market, where growth has been strong. Although
the market is still in its infancy, there is tremendous opportunity for
insurers to innovate and provide customers with eective solutions,
reaching into areas such as long-term care, which is a key issue facing
ageing populations.
I do believe we are yet to see the full eects of the demographic shift.
This is denitely an area where actuaries have a leading role to play in
shaping future outcomes.
Deepak Jobanputra
editor@theactuary.com
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Deepak Jobanputra believes the ongoing nancial
volatility we are seeing holds its own opportunities
A glimmer
ofhope
DEEPAK JOBANPUTRA
Although the
underwritten annuity
market is in its infancy,
there is tremendous
opportunity to innovate.
April 2013 THE ACTUARY 5
Li ke The Actuary on Facebook Joi n The Actuarys Li nkedI n group Fol l ow @TheActuaryMag on Twi tter
www.theactuary.com
p05_apr_editorial_SEMIFINALCT.indd 5 22/03/2013 08:19
MORE LETTERS ONLINE
More letters are available online at
www.theactuary.com/opinion
THE ACTUARY April 2013
Opinion
Letters
The editorial team welcomes readers letters but reserves
the right to edit them for publication. Please email
letters@theactuary.com. The deadline for receiving letters for
the May issue is 16 April 2013.
LETTER OF THE MONTH
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letters@theactuary.com
6
Earth is Room Enough
Earth is Room Enough is the title of a book by Isaac Asimov, a
collection of short science ction stories published in 1960. It
also seems an appropriate title for a response to the shallow
logic of the Malthusian article The World is Not Enough
(p28,January/February).
The article asks us to believe that it is reasonable to estimate
that, without heavy government intervention, the number of
years the worlds supply of minerals will last can be calculated
by dividing current reserves by the annual level of
consumption. This ignores many market factors that inuence
consumption: market price, further discovery, substitution
and particularly the ingenuity of humans for developing
greater e ciencies in the use of resources, and their capacity
for research and invention to improve quality of life.
In forecasting doom and gloom, the article also ignores the
ready ability of humans to adapt to changing conditions.
However, it is not the purpose of this letter to critique the
article or the paper on which it is based. My concern is with the
failure of the Resource and Environment Group (REG) to do so.
The actuarial profession has traditionally been proud of its
aim to base projections of outcomes on sound analysis of all
relevant and available data and statistics, producing logical
assumptions clearly stated and accompanied by comment
regarding their limitations. The REGs input to the paper,
which has been written largely by non-actuaries, appears to be
little more than some generalised comments on factors
inuencing actuarial assumptions. While I would expect that
they were involved in the choices made under the dierent
scenarios presented, the assumptions are not stated and not
qualied in the normal actuarial way. Projections for up to 100
years must be subject to major uncertainties, even without the
inevitable need to make subjective assumptions regarding the
consequences of government interventions.
I have always been enthusiastic about the profession
moving into wider elds, with actuaries using their skills to
assist the current participants in those elds. However, in this
case, the underlying paper appears to reect more a group of
actuaries simply climbing on the back of experts in another
eld, accepting their philosophies and methods without
question. Indeed, the whole tenor of the paper is that of a
political polemic rather than a realistic analysis of the limits to
economic growth. Certainly, the suggestion that the only way
world order, such as it is, can be preserved over the next
century is by the development of a global consensus
government process for distribution of resources appears to
represent the narrow desire of the authors rather than the
result of an objective assessment of possible outcomes.
I would challenge the REG to provide a proper actuarial
critique of the paper, analysing assumptions and reasons for
their adoption, and focusing on the uncertainties in arriving at
the model outcomes particularly in relation to the
questionable success of governments in market manipulation.
Geo Dunsford 15 March
Look back before you look forward
This year is the 400th anniversary of a landmark book, Richard Witts
Arithmeticall Questions, published in 1613. It provided a pioneering
and very practical insight into one of the foundations of actuarial
science compound interest. The subject is clearly explained and the
author takes great care to ensure accuracy, probably thinking in much
the same way as modern actuaries. The book contains interest tables
and 124 worked examples on the valuation of leases and annuities.
One of the simpler examples describes calculation of annual
payments on a debt due in two years time, which is now to be paid o
in instalments over the next ve years.
Richard Witt was a 44-year-old mathematical practitioner from
London, who was consulted on a variety of commercial and property
matters. The profession is fortunate to own a copy of his important
book, which is on display in the library at Staple Inn this year.
The librarys holdings of historical material have been considerably
strengthened in recent years. I hope that all members will take pride
in this unique resource and that some may even use it occasionally
as a source of inspiration when dealing with todays issues. We can
often benet by looking back before looking forward.
Chris Lewin 3 March
Power of long memory was
along time in the making
Faisal Zais article (The Power of Long Memory, p23, January/February) was
excellent. It was, however, slightly marred by his crediting Mandelbrot with being
the man who persuaded people that stock returns are not normally distributed
and that stock markets and most asset return processes are not memoryless.
Ifhe did it took a long time. Almost all nancial economists either ignored or
derided Mandelbrots work throughout the 1960s, 1970s, 1980s and 1990s.
Similarly, nearly all younger (now late middle-aged) actuaries derided or
ignored the work of Plymen, Clarkson, Fitzherbert, Arthur and those of us with
real investment experience, who had been expounding similar doubts about
higgledy-piggledy growth, as it was then called, even before Mandelbrot.
A study of Clarksons contributions to sessional papers will note that he was
referring to the Hurst component, at least by the 1970s. But when some 20 years
later, as a member of the professions nance and CPD working party, I tried to
introduce two of Hursts original papers as additional reading none of my much
younger colleagues on that committee could see their relevance to investment.
I hope that a newer generation of actuaries will be encouraged by your choice
of Faisal Zais article to read beyond the professions present inadequate courses
on nance and investment in an attempt to gain real understanding of how stock
markets work.
S. J. Green 1 March
p06_apr_letters_SEMIFINALCT.indd 6 22/03/2013 08:37
Opinion
Presidents comment
This month, I am reporting on the Enterprise
Risk Management Practice Executive
Committee (PEC) and its aims for the coming
year. Risk management, in its myriad forms,
is becoming more important in all our daily
lives. The Prudential Regulation Authority
(PRA) is taking shape with the appointment
of Andrew Bailey, and the proposals for new
supervision under the Financial Conduct
Authority are being published.
This twin peaks regulatory structure
should greatly enhance the regulators
approach to tackling systemic risk and will
consider supervision from a macro-prudential
perspective. However, there will still be
great reliance on internal risk management
strategies, and the profession can do much to
inuence the discussions on such risks.
For those who work in the enterprise risk
management (ERM) arena, the PEC is aiming
to develop more thought-leadership events
that will provide opportunities for debate of
current issues and enable those interested to
gain continuing professional development
(CPD) accreditation.
A number of excellent speakers have already
been booked for the Risk and Investment
Conference, being held in Brighton in June.
These include Julian Adams, director of
insurance, PRA; Tim Harford, economist,
author and the columnist behind the FTs
Undercover Economist; and professor Karel
Van Hulle, former head of insurance and
pensions at the European Commission. One
area that is being looked at closely is the greater
understanding of drivers from regulation and
rating agencies that might aect future risk
management practice for actuaries.
As risk management extends into all aspects
of nancial work, and following the Institute
and Faculty of Actuaries desired strategy in
this area, the ERM PEC is intending to set up
a number of cross-practice initiatives, which
will assist actuaries who predominantly
work in more traditional areas. Each of these
initiatives will be tailored to the needs of each
of the dierent collaborating PECs.
Jules Constantinou believes success will
be measured by the extent to which links
are established between the ERM group and
the other PECs and the integration of risk
management resources and material in the
other PECs research and CPD programmes.
The ERM research and thought leadership
committee intends to develop and deliver
key member-led research that inuences not
only the profession but other risk groups. Its
priorities are to develop:
research topics for actuaries working in ERM;
risk management topics as part of the cross-
practice initiatives; and
broader research topics that enhance the
actuarial professions reputation in this area.
Also important is developing links with
other like-minded UK and international
societies. It is hoped in the near future to
planjoint events and undertake research
with the Institute of Risk Management
and the Professional Risk Managers
InternationalAssociation.
By forging links with overseas actuarial
associations, such as
the Society of Actuaries
and the Casualty
Actuarial Society, as
well as other groups
in the international
risk management
community, we can
identify any special
needs of overseas
members in the areas
of risk management.
This will also enable us to identify areas that
could be useful in the work undertaken in the
UK. The more we can do this, the greater our
chance of exposing actuaries to disciplines and
thinking from other risk professionals, while at
the same time broadening our inuence.
The Chartered Enterprise Risk Actuary
(CERA) qualication continues to expand, and
over 1,400 students have completed the exams.
One aspect of feedback that particularly stands
out is that the course teaches people to speak
the language of the board. Only by being able
to do this can we hope to have more inuence
and authority in the future.
Following the award last year of the CERA
designation to 10 actuaries who are considered
thought leaders in the eld, applications
are being accepted for very experienced
practitioner designation. Senior risk
professionals are invited to apply for CERA
status by virtue of their work and experience
in the eld instead of taking the exam.
The PEC also aims to work with other
practice areas to help members transfer into
chief risk o cer (CRO)
and other senior risk-
related roles. We have
established an actuarial
CRO group to provide
a forum for the most
senior risk actuaries
in each rm to share
their understanding
and knowledge of ERM
for the benet of the
profession as a whole.
The year ahead will be challenging for the
ERM PEC as it drives forward its strategy, but I
am convinced that it will make much progress
with its thoughtful initiatives and that we can
rely on it to deliver solutions to meet the future
challenges of risk management. a
PHILIP SCOTT
Stand and
deliver
Philip Scott reviews the cross-practice
initiatives put forward by the enterprise risk
management committee
www.theactuary.com
An actuarial CRO
group provides a forum
for the most senior risk
actuaries to share their
understanding and
knowledge of ERM.
Philip Scott is the
president of the
Institute and
Faculty of Actuaries
p07_apr_pres_comment_SEMIFINALCT.indd Sec1:7 22/03/2013 08:37
www.theactuary.com
THE ACTUARY April 2013 8
Opinion
Soapbox
A study of 1,000 adults conducted by the
Federation of Finnish Financial Services in
2012 found that 27% of respondents knew a
person who had deceived his/her insurance
company. This only begins to highlight the
scale of insurance fraud across Europe.
Insurance fraud undermines the principle of
mutual benet on which insurance is based,
since the vast majority of honest customers
end up paying for the dishonesty of the few. It
aects every type of insurance and ranges
from opportunistic claims to highly organised
crime rings. It has an impact on society as a
whole, as research shows that insurance fraud
can be used to fund criminal activity.
Across Europe, it has been estimated that
detected and undetected fraud represents up
to 10% of insurers total claims expenditure.
National insurance associations collect data
on fraud levels in their countries. The
Association of British Insurers, for example,
estimates that around 1.9bn of fraud goes
undetected each year in the UK. This is despite
insurers detecting more fraudulent claims
every year up 7% year-on-year in 2011 to
983m. Across the Channel, gures from the
French Federation of Insurance Companies,
the FFSA, reveal that over 35 000 fraudulent
claims were detected in 2011, leading to
savings of 168m.
Pan-European statistics are, unfortunately
di cult to compile, as countries collect
dierent data and measure fraud in dierent
ways. Nevertheless, national statistics
demonstrate what a major issue fraud is. This
is why insurers invest signicant resources in
their ght against fraud and why Insurance
Europe recently published a booklet entitled
The Impact of Insurance Fraud to raise
awareness of the issue.
Insurers use a variety of methods to tackle
fraud. Initiatives vary between countries and
are constantly evolving to keep pace with
changes in fraudulent behaviour.
Information is exchanged across Europe,
within the limits of data protection and
privacy requirements. In the Nordic countries,
regular meetings are held to discuss
developments, since fraud trends in one
country have been seen to spread.
Formalised groups to investigate fraud also
exist in many states. The UKs Insurance Fraud
Bureau (IFB) was set up in July 2006 to detect
and prevent organised
and cross-industry
fraud, working closely
with law enforcement
agencies. The impact of
the IFB has been hugely
positive, leading to
numerous arrests and
savings of tens of
millions of pounds for
insurers and their
customers. In France, a
national body, the
Agence Pour la Lutte Contre La Fraude
lAssurance, ALFA, was set up in 1989 to
investigate suspicious claims and promote
counter-fraud activities. It trains and certies
fraud investigators, advises on cases targeting
multiple insurers and on managing relations
with law enforcement agencies.
Cooperation with law enforcement agencies
is, of course, vital. In Denmark, the insurance
association F&P organises exercises at the
Danish Police Academy on how to combat
insurance fraud. Former police o cers are also
often employed by the industry.
Cheat-lines have proved successful in a
number of countries, including Ireland,
Sweden and the UK. These allow members of
the public to report suspected or known fraud.
Technology can also be harnessed to ght
fraud. Methods include electronic devices to
detect document authenticity and the use of
publicly available
information from social
media. One claim in the
UK for back injuries was
rejected when Facebook
images showed the
claimant doing
gymnastics and training
for a charity run.
Insurance fraud is not
a victimless or
insignicant crime.
Serious consequences,
including custodial sentences, await those
found guilty of it. The industry is constantly
strengthening its systems to ensure that all
types of fraud are detected and prevented, but
it also needs the support of governments, law
enforcement agencies and the general public.
Michaela Koller is director-general of Insurance
Europe, the European insurance and reinsurance
federation. She also chairs the insurance and
reinsurance stakeholder group of the European
Insurance and Occupational Pensions Authority
and testies regularly at EU hearings.
The Impact of Insurance Fraud is free to
download at www.insuranceeurope.eu
MICHAELA KOLLER
Cooperation
is the key to
cracking fraud
Michaela Koller takes a look at the
measures insurers are taking across
Europe to tackle the spiralling rate of
insurance fraud
The impact of the
UKs Insurance Fraud
Bureau has been hugely
positive, savings of
tens of millions of
pounds for insurers and
theircustomers
p08_apr_soapbox_SEMIFINALCT.indd 8 22/03/2013 08:37
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ACT.04.13.009.indd 9 22/03/2013 08:54
www.theactuary.com
Gordon Sharp, chairman, CMI
In November, we announced changes to the
funding structure and publications of the
Continuous Mortality Investigation (CMI);
these changes are now in eect. Registration
and subscription details may be found at
bit.ly/Zvq70M
All our existing publications, including
the recently released CMI 2012 mortality
projections model, remain on the open-access
area of www.actuaries.org.uk
However, new publications will be for
registered users only. Watch out for S2
pensions mortality tables from the self-
administered pension schemes (SAPS)
investigation and the latest results from the
life o ce mortality investigation, both of
which are coming soon.
The CMI has been incorporated into a
limited company of the same name, wholly
owned by the profession. This is to provide
clarity from the previously unincorporated
structure. It does not aect the day-to-day
operation of the CMI or its not-for-prot status.
Join the mergers and
acquisitions group
We are looking to reinvigorate the mergers and
acquisitions (M&A) member interest group
and would like all interested members to be
involved. This group would be useful for
actuaries working on corporate and private
equity mergers and acquisitions, either full
time or as part of their work. The group will:
share ideas and engage in discussions on
issues surrounding corporate transactions;
promote the value actuaries can add to the
M&A process; raise the bar in terms of quality
of advice given by the profession in M&A
situations; and, where appropriate, act as an
informal representative body for members.
We plan to organise a kick-o meeting for
April/May to discuss future activity/priority
issues etc, and would love to see you there.
If you are interested in joining and/or would
like to attend the meeting, please notify Craig
Ajimuda at craig.ajimuda@actuaries.org.uk
For general information about member
interest groups, visit bit.ly/YYYxcf
News
Profession
Upfront
NEWS UPDATES FROM THE ACTUARIAL PROFESSION
I was recently discussing strategy implementation
with a past president of the Institute and Faculty of
Actuaries. He asked me how we would know if we
had successfully delivered on our strategy what
would success would look like? Id like to share with
you the answer I gave him.
In my opinion, success goes hand in hand with quality, and I strongly
believe in the quality of our qualication above all else. We can only
deliver the professional body the membership deserves if we maintain
our high standards, which is the hallmark of our exams, continuing
professional development and regulation. This gives us the reputation
required to attract the best possible students.
On reputation, you may have seen the Institute and Faculty of
Actuaries quoted in the media more often than previously in the past
few months. As part of our public aairs strategy, we are increasingly
looking to give the profession a strong voice, which speaks out in the
public interest in areas where we can add value. However, there is no
point in having a strong voice without the reputation to back it up
which brings me back to quality.
Its a virtuous circle: quality breeds quality. Having a strong
reputation creates demand from employers for FFAs and FIAs, meaning
that we are able to attract the best prospective students, whose skills
further cement the reputation of the Institute and Faculty of Actuaries.
An inevitable consequence of this will be an increase in both inuence
and membership numbers across the globe, which will help us to serve
our public interest role.
By delivering our services to the highest standard, we will ensure that
our members are fully supported throughout their careers. Therefore,
when it comes to measuring how successful we are in implementing our
strategy, it all comes back to delivering a quality service. Ultimately, if
we have a strong reputation based on the high quality of our
activities, we will attract the best members, who will gain
the best jobs across the world. I truly believe that this is
within our grasp, providing we place the quality
agenda at the heart of everything we do. This is our
promise to you as your professional body a
A virtuous
circle
Opinion
CEOs comment
Derek Cribb explains why the quality agenda
should be at the heart of everything we do
DEREK CRIBB
Derek Cribb is the
chief executive of
the Institute and
Faculty of Actuaries
Mortality update:
astronger CMI
ACCESS THE PROFESSIONS ANNUAL REPORT
p10_13_apr_prof_news_SEMIFINALCT.indd 10 22/03/2013 08:38
www.theactuary.com
Regions leader Beth Montgomery takes us
on a whistle-stop tour of the professions
regional actuarial societies in the UK
Q. As regions leader, how do you engage
and support members?
Members are supported in a number of ways.
This year we have created a regional actuarial
activity area (bit.ly/XpmCqa) on the members
section of our website. This provides
information and contact details for each
regional society, plus a programme of events. If
members are moving or travelling to dierent
regions for business, this gives them access to
an instant networking point with colleagues.
Through regular contact with these societies
and by working closely with colleagues
internally, I am able to develop opportunities for
joint working and future events. This means all
members can access excellent opportunities for
continuing professional development (CPD) and
networking, regardless of location.

Q. Are there many actuaries based outside
Edinburgh and London?
There are currently over 12,000 members
across the UK, including actuarial students. Of
these, around 45% are based outside London
and Edinburgh and many of them also belong
to their local regional actuarial society.
Q. Where are the regional societies and
what do they do?
In addition to the activities in Edinburgh and
London and the burgeoning student network,
there are currently 10 regional societies
operating around the UK. They cover the
regions of: Birmingham; the north-west of
England; Bristol; Northern Ireland; the
Channel Islands; Norwich; Kent; Wessex; the
Isle of Man; and Yorkshire.
All of these societies are run by committees of
volunteers, who create and facilitate a series of
professional and social events for members in
their local area throughout the year.
Q. Can you highlight examples of key
developments for members in the regions?
The success of the recent regional roadshow,
DWP calls for evidence, which visited seven
UK locations to gather member feedback for
the Institute and Faculty of Actuaries
consultation response, as well as the ongoing
Conicts of interest sessions, which are
being delivered in over 10 dierent locations,
have given us a great template for the future.
Support from the regional societies in hosting
these sessions has been invaluable, and
member feedback has shown that there is
certainly a demand for future topics to be
delivered in this way.
Working with the Scottish Board, we have
launched a new event format called Knowledge
Sharing Scotland. The rst event will be held in
April 2013 and will allow volunteer members to
create and host small, debate-style sessions in
local o ces. The group will focus on generating
activity for members based in Glasgow and
Stirling as well as Edinburgh and we are hopeful
that this will provide a platform for networking
and information sharing among the actuarial
community in an informal environment.
Further information on Knowledge Sharing
Scotland can be found at bit.ly/YYF6wR
If you have any ideas that you would like
to share with Beth, please contact her on
+44(0)131 240 1323 or email her at
beth.montgomery@actuaries.org.uk
First port of call for
networking and more
Sloan Prize winner praises inclusive debate
The Sloan Prize for the best
contribution from the oor at the
sessional meeting Unintended
Consequences of Basel III and
Solvency II has been awarded to
Dr Garry Smith.
A pensions-turned-banking
actuary, on secondment from
Hymans Robertson to RBS,
Smith is currently applying
actuarial techniques to
bankingproblems.
He said of his award: I was
delighted to hear that I had been
selected to receive the Sloan
Prize following the January
sessional meeting. The
establishment of the Sloan Prize
showed great insight into the
sort of practical measures that
really do make a great
contribution to what the
profession ought to be about in
terms of open and inclusive
debate and discussion.
This award continues to be
supported by founder Ronnie
Sloan, who said: I was glad to
hear how pleased Garry was at
the recognition bestowed by his
award, which he hoped would
encourage others to participate
at meetings.
The sessional meeting
took place on 21January
inEdinburgh.
Beth Montgomery:
all members can
access excellent
opportunities for
CPD and networking,
regardless of location
www.theactuary.com
News
Profession
NEWS UPDATES FROM THE ACTUARIAL PROFESSION
Solvency II transition:
focus on what is clear
Changes to Actuaries Code : your opinion counts
As the mist of delay and the fog of uncertainty
obscures the view of eventual Solvency II
implementation for a UK actuary, it is easy to
forget that much of the legislative landscape
is clear. The provisions of the Solvency II
regime may take a variety of forms, but we are
far closer to understanding whose rulebook
will be the main regulatory driver, aecting
the future work of an actuary. The Prudential
Regulation Authority (PRA) and Financial
Conduct Authority (FCA) handbooks,
Financial Reporting Council (FRC) guidelines,
European-level technical and implementing
standards, and the Groupe Consultatif
Actuariel Europen or International Actuarial
Association (IAA) standards are all relevant.
The Life Practice Executive Committee of
the profession set up a working party to
understand better the coverage and gaps
in the legislation and standards that will
apply to actuaries working on UK regulatory
reporting. The working party is in the process
of nalising its conclusions, which will be
published on the professions website. In this
article, we touch on who will be writing the
rules, how they will be interpreted and the
potential for disagreements and gaps.
The main source of future Solvency II
legislation is the raft of provisions coming
through the EU procedures as what are
termed level 2 and level 3 texts. These are on
subjects as diverse as acceptable
documentation of management actions for a
with-prots fund, when contracts should be
unbundled and valued separately, and, of
course, the discount rate that should be used
in assessing liabilities.
Rules deriving from this source are
expected to include the level 2 texts, but also
parts of level 3. Consultation on these texts
has hitherto been private, and directed at
certain key industry groupings. In the future,
the EU protocols talk of extensive
consultation at the EU level.
The interpretation of rules is another
source of change. The ECJ interprets
legislation in the context of its structure and
purpose, whereas the UK courts have looked
not to purpose but to a literal interpretation of
the words of the legislation. However,
although our background and court system
still favours literal interpretation, the FSA
handbook calls for a purposive interpretation
in GEN 2.2.1 and 2.2.2. In future, the ECJ and
UK courts will have to consider purpose.
The sources of guidance are set to expand.
The UK technical actuarial standards (TASs)
will continue to apply to a UK actuary in a UK
company. For a UK actuary working for a
French or German rm there will be a set of
rules overarching local requirements. The EU
will issue guidance through the European
Insurance and Occupational Pensions
Authority (EIOPA), based heavily on the level
3 texts. And the Groupe Consultatif is
currently consulting on some of its proposals,
hopeful for widespread EU adoption.
Back in the UK, the PRA/FCA will have their
own guidance that may impinge. One area of
concern is the potential for disagreements or
gaps between UK and EU texts. For example,
the bulk of the current INSPRU texts will
disappear under Solvency II, to be replaced in
the main by direct EU standards (old level 2
and some level 3). However, in a recent
consultation paper, the FSA deliberately
imported some of the current realistic balance
sheet terminology into the conduct of
business handbook (COBS) texts, which may
be misaligned with the nal Solvency II
requirements for with-prots liabilities.
Conversely, UK specic issues are unlikely to
be covered well, yet the scope for more local
interpretive guidance may be limited.
Members have received an email to let them
know about a consultation we issued on
5March in relation to proposed changes to the
Actuaries Code.
The code has now been in existence for over
three years and we want to make sure that it is
achieving what it set out to do to provide a
set of high-level ethical principles that
members are expected to observe in the public
interest in order to build and promote
condence in the work of actuaries and in the
actuarial profession.
Given the importance of the code in our
regulatory framework, we encourage you to
read the proposals and give us your views if
you havent already done so.
We would be pleased to receive any general
comments on the recommendations, in
addition to the completed questionnaire.
Please note that the deadline for responses is
30 April 2013.
A link to an online version of the proposals,
Exposure Draft 29 The Actuaries Code, and
the questionnaire can be found on the
Institute and Faculty of Actuaries website at
http://bit.ly/Yqqsyq or by going directly to
http://svy.mk/10CMn97
NEWS I N BRI EF
Sir Joseph Burn prize presentation
Philip Scott, president of the Institute and Faculty of
Actuaries, presented Katie Watkin (pictured above
left) with the Sir Joseph Burn prize for her overall
performance in the examination process.
Member opportunity: chairman
of management board
The management board has oversight responsibility
for the operational management of the Institute and
Faculty of Actuaries. The board chairman receives
a fee of 24,700 pa for this role, which has arisen as
part of the normal governance cycle. Members who
feel they may have the appropriate skills can nd out
more at bit.ly/Zd2iYh
Towers Watson prize presentation
Professor Paul Sweeting, Fellow of the Institute
and Faculty of Actuaries, presented James Keates
(below right) with the Towers Watson Prize for
Financial Economics for his performance in the CT8
examination.
www.theactuary.com
13
LOOKI NG FORWARD TO 201 3
15-17 May
Celtic Manor, Newport
Book your place by 15 April to
receive the early bird booking fee.
Speakers include:
Tim Harford, behavioural
economist and award-winning
Financial Times columnist;
Roy Chappell, SCOR UK
and Darren Spriggs, Ageas;
Jamil Qureshi, performance-
enhancing psychologist;
Guy Shone, head of customer
and market insight,
Money Advice Service.
For further information visit
http://bit.ly/10ztfgb
Join the Health and Care LinkedIn
group at http://linkd.in/YTNzDQ
Sponsorship opportunities are
available at http://bit.ly/WGS1UP
or contact hannah.watson@
actuaries.org.uk
Conicts of Interest
Interactive Session
(Pensions)
Wednesday 10 April
Mercer, Belfast
http://bit.ly/14pdggQ
Conicts of Interest
Interactive Session
(Pensions)
Tuesday 16 April
Maclaurin House, Edinburgh
http://bit.ly/10admw3
Highlights of the
Life Conference 2012
17 April
Hilton Metropole, Birmingham
http://bit.ly/XQOcje
CILA
1 May
Royal College of Physicians,
London
http://bit.ly/VAvQ6l
CIGI
2 May
Royal College of Physicians,
London
http://bit.ly/WsUWpk
Health and care conference Events 2013
Year of change: the story of
pensions reform continues
The rst quarter of 2013 has been a period of signicant activity in pension reform, with changes
suggested for both the state and occupational pensions systems. This follows the commencement
of automatic enrolment towards the end of 2012.
On 14 January, the government launched its long-awaited white paper, The Single-Tier Pension:
A Simple Foundation For Saving. This aims to ...provide the right foundation to allow people to
plan and save for their retirement with condence. It proposes an extension of the state
retirement age to 67 by 2028 and a single-tier state pension of 144 per week, subject to qualifying.
The introduction of a single tier would mean the abolition of the State Second Pension.
Consequently, the White Paper also proposes the cessation of contracting-out. Employers that
operate contracted-out schemes will experience an increase in national insurance (NI)
contributions, as will employees who are members of those schemes. Some commentators have
suggested this will kill o remaining unprotected dened benet schemes in the private sector.
The Department for Work and Pensions has issued a call for evidence to address pensions and
growth. This posed two questions: 1. Whether to introduce a new statutory objective for the
Pensions Regulator and; 2. Whether to smooth assets and liabilities in scheme funding
valuations. The Institute and Faculty of Actuaries held a series of meetings with regional
actuarial societies to discuss the call for evidence. Its responses are online at bit.ly/LCkwSr.
Pensions minister Steve Webb opened public debate about pension provision in the UK with
the publication of the strategy document Reinvigorating Workplace Pensions in December. As
debate continues, there will be many opportunities for pensions actuaries to inuence the future.
Pensions minister Steve Webb: provoking
debate about future UK pension provision
PA
14
www.theactuary.com
News
Industry
MORE BREAKING NEWS ONLINE
Visit www.theactuary.com for breaking news
and to register for weekly news alerts
Scottish independence would rock
pension industry across the UK
Actuarial consultancy warns of increased costs for
employers and need for state support
If the 2014 referendum on Scottish independence results in a yes vote,
it will require the establishment of a new institutional framework to
supervise and deliver pensions, according to consultancy Xanity.
It will also involve the development of dierent tax and national
insurance regimes, which will lead to an increase in costs initially at
least for payroll systems and treasury functions. A revised tax regime
will create still more costs, Xanity said.
Donald Campbell, the companys principal consultant, said: A yes
to Scottish independence would make huge waves across the pension
industry, both in Scotland and the remainder of the UK.
Corporate advisers would be the obvious winners in the short term,
but additional costs would arise for many employers, who would almost
certainly be pressing for the new government to provide support in one
form or another.
Further issues would also be created by the need to either replicate
or complement The Pensions Regulator and possibly the Pension
Protection Fund, Xanity said. There could also be a requirement for
separate professional advisers and dierent exam regimes.
For more on this story, visit bit.ly/16b36Ex
Plans to smooth gilt yields detrimental
for most pension schemes, warns NAPF
Answer is to ensure full exibility of the existing
discount rate regime, says director of policy
Government plans to allow pension schemes to smooth the value of
their assets and liabilities over a number of years could do more harm
than good the National Association of Pension Funds has claimed.
Responding to a call from the Department for Work and Pensions
for evidence on whether smoothing should be applied, the NAPF said
smoothing gilt yields over a two- to three-year period would have a
detrimental impact on the funding position for the majority of schemes.
This is because it would lock schemes undergoing a valuation in 2013
into last years very low gilt yields, weakening their overall funding
positions so that the companies running them could face even bigger
decits. Government should drop any plans to introduce smoothing in
the near future and instead ensure that the full exibility of the existing
discount rate regime is used, the NAPF said.
Darren Philp, director of policy at the NAPF, said: Smoothing is not
the right answer. If it goes ahead, not only will it be too little, too late
but it might do more harm than good. It risks making matters worse
for pension funds once interest rates start picking up, and could cause
greater confusion for trustees, actuaries and employers when agreeing a
discount rate.
Instead, he concluded, pension funds need greater reassurance from
the government and The Pensions Regulator that they can adjust the
discount rates they use where they have been pegged to gilt yields.
For more on this story, visit bit.ly/10fVFYe
DC systems must be rened
to produce good outcomes
The UK is making good progress towards
developing a sustainable dened contribution
(DC) pension system, but it must focus on
providing adequate outcomes for savers, the
Organisation for Economic Co-operation and
Development (OECD) has said.
DC pension schemes are expected to
provide a major source of retirement funds
in many of the 34 countries that are members
of the OECD. However, a number of factors
mean these systems might not produce
adequate incomes, it explained in a report
entitled DCDesign and Delivery.
However, the OECDs research also found
that, where workers save for 30-40 years, it is
possible for DC systems to produce attractive
returns within a low volatility environment, in
turn delivering adequate retirement incomes.
It detailed 10 optimal design and delivery
features for a DC pension system.
For more on this story, visit bit.ly/XpS3UH
EIOPA urges co-ordinated
action on interest rates
The European Unions insurance regulator
has called on member states to take a co-
ordinated approach to address the damage
that persistently low interest rates are causing
to the insurance industry.
The European Insurance and Occupational
Pensions Authority (EIOPA) also committed to
taking steps itself to alleviate the impact of low
rates, which it said were already aecting the
industry in several member states.
In an opinion note, EIOPA explained that
both the life and non-life insurance sectors
were aected by the issue, which hits asset
and liability values. In terms of liabilities,
persistent low rates mean life insurers
long-term obligations to their policyholders
become more expensive in todays terms. On
the assets side, they have a negative eect on
insurers investment results and increase the
re-investment risk of assets.
EIOPA noted that low rates and resulting
lower investment returns also reduce the
margin for short-term insurers that use returns
to compensate for weak underwriting results.
Gabriel Bernardino, chair of EIOPA, said:
The economic environment shows us that
joint actions against long-lasting low interest
rates environment are crucial. By co-ordinating
these actions, EIOPA is committed to ensure a
consistent supervisory approach and a fair and
equitable treatment to policyholders.
For more on this story, visit bit.ly/108yXVI
news@theactuary.com
Variable annuity
sales set record
Sales of annuities that
oer variable levels of
payout depending on
how they are invested
reached a record 1.42bn
in the UK last year, Towers
Watson has revealed.
The consultancys gures
show that, in 2012, the
value of variable annuity
sales increased by 30% on
the 1.09bn recorded in
2011. The nal quarter of
2012 saw quarterly sales
of the products exceed
400m for the rst time.
bit.ly/16oBADF
Annuity code to
simplify choice
The Association of British
Insurers has formally
launched a new code of
conduct to make it easier
for retirees to make the
right choices when they
use their pension pot
to buy an annuity. The
mandatory code, which
came into eect on
1March, requires the ABIs
members to provide clear
and timely information to
help people approaching
retirement to understand
what their options are.
bit.ly/13ehFaB
Surplus a rarity
for DB schemes
The number of leading UK
companies whose dened
benet (DB) pension
scheme is in surplus is
continuing to fall, JLT
Pension Capital Strategies
has said. According to
the rms latest quarterly
research, only 13 of the
FTSE 100 companies
would have disclosed a
surplus if theyd had a
year-end of 31 December
2012, compared with 16
that reported a surplus in
their most recent annual
report and accounts.
bit.ly/YW6TxV
p14_apr_ind_news_SEMIFINALCT.indd 14 22/03/2013 08:39
15
www.theactuary.com
April 2013 THE ACTUARY
MORE GI NEWS ONLINE
For further GI news,
visit www.theactuary.com/news/
Esure sets share issue pricing
Esure, the UK personal lines insurer, has announced the price range for
a planned initial public oering (IPO) in 2013. The company owns the
Esure brand, made famous by the late Michael Winners Calm down,
dear television adverts, as well as Sheilas Wheels, the insurance group
designed with women in mind. The company was founded in 1999 by
its chairman Peter Wood, the insurance pioneer who also founded Direct
Line in 1985. Lloyds Banking Group sold its 70% stake for 200m in 2010
to a consortium led by Wood.
Esure insures around 5% of the UKs motorists. At the end of 2012,
it had 1.25 million in-force motor policies and 500,000 home policies,
helping the Surrey-based company to more than double pre-tax
prots to 115m last year. The companys conservative approach to
underwriting means 87 per cent of its motor policy holders are over 30
years of age, while 98 per cent of in-force home policies are located in
areas considered to have a low risk of ooding.
Stock in the IPO will be oered at between 240p and 310p, giving a
mid-point valuation of 1.15bn, indicating a place in the FTSE 250.
Insurers announce dividend cuts
Several insurers have recently announced changes to their dividend
policies. On 20 February, UK-based insurer RSA announced that it
would be cutting its nal dividend for 2012 from 5.82p per share to 3.9p
per share. CEO Simon Lee said that the dividend was being cut to a level
appropriate to the business today. RSAs shares fell 16% following the
announcement. Lee said: We were clearly over-distributing prots. You
need to retain some earnings to grow the business and thats what were
doing. He also blamed prolonged low bond yields.
QBEs nal dividend was reduced from AUD0.25 per share in 2011 to
AUD0.1 per share in 2012. QBE said that it had reconsidered its dividend
policy. For 2013, it has adopted a payout ratio of 50% of cash prot.
Following a transitional year, Aviva announced a reduction in its
nal dividend from 16p per share to 9p per share, with the full year
dividend falling from 26p to 19p. Aviva said that it expected the 2013
dividend to be rebased in line with the cut in the nal dividend. Aviva
CEO Mark Wilson said that, although Aviva had enough liquidity to pay
the dividend in the short term, cash ows from the business are too
tight to sustain the historic level.
Call to make Flood Re compulsory
The Association of British Insurers (ABI) suggested that all insurers who
write property insurance in the UK should be compelled to participate
in the new Flood Re scheme. Otto Thoresen, director-general of the ABI,
told a parliamentary committee that one of the failings of the current
ve-year statement of principles was that, due to its voluntary nature,
some insurers were able to operate only in low-risk areas. The ABI is
proposing a levy on the insurance industry to give Flood Re enough
start-up capital. Flood Re would be not-for-prot and would be overseen
by the government.
Driving down cost of car insurance
At the start of March, the Association of British Insurers (ABI) issued
a new report, Lifting The Bonnet On Car Insurance, What Are The Real
Costs?. The association estimates the following breakdown of motor
insurance premiums:
29% paid out in repair and replacement costs;
20% paid out in whiplash claims;
14% paid out for non-whiplash personal injury claims less than 0.5m;
9% paid out for personal injury claims greater than 0.5m.
Nick Starling, ABIs director of general insurance, said despite rising
costs linked to excessive legal fees, and whiplash, insurers are determined
GENERAL INSURANCE NEWS ROUND-UP

LARGE LOSSES
Winter storms in US
8-27 February
At least four separate winter storms
aected the United States during
February. This was highlighted by a
powerful noreaster, which prompted
states of emergency to be declared in
six states. Heavy snows accumulated
to nearly 40 inches in Connecticut,
and coastal ooding was recorded in
the city of Boston. Economic damage
from the storms was estimated at
US$100m (67m) , much lower than
originally anticipated.
US$100m
Estimated economic losses from the winter storms that hit
the United States in February
that customers get the best insurance deal. That is why the industry has
successfully lobbied government to introduce reforms to streamline the
compensation system and drive down inated legal costs.
At the same time, the ABI estimated that young drivers could pay 15%
to 20% less for their car insurance if the government introduced, in full,
ABI proposals to improve driver safety. The associations proposals for
young drivers include:
a one-year minimum learning period;
limiting the number of young passengers and restricting night-time
driving after passing the driving test;
zero blood alcohol limit for an initial period after passing the test.
Portal scheme extension delayed
Following representations from, among others, the Association of
Personal Injury Lawyers, the UK Ministry of Justice has delayed the
implementation date for extending the road tra c accident (RTA)
portal scheme to personal injury claims worth up to 25,000. Currently,
the portal applies to RTA claims valued between 1,000 and 10,000.
As well as this rise in the maximum claim value, it had been
plannedthat from 1 April 2013, the scheme would include for the
rst time classes such as employers liability and public liability, also
cappedat25,000.
The development of the hardware and legal rules was not seen to
be su ciently advanced, and the governments costs adviser, Paul
Fenn, had also called for a delay. The delay will not aect the Legal
Aid, Sentencing and Punishment of Oenders Act 2012, which is due to
come into force on 1 April 2013. This means that Lord Justice Jacksons
package of reforms to rein in the costs of civil justice will not be aected.
GETTY
p15_apr_gen_ins_news_SEMIFINALCT.indd Sec1:15 22/03/2013 08:39
www.theactuary.com
Later this year, Master-elect of the
Worshipful Company of Actuaries,
CharlesCowling, will lead some
30actuaries and friends on one of the
UKsmost challenging long-distance walks
to raise money for charity. Walking from
Robin Hoods Bay in North Yorkshire to
St Bees on the Cumbrian coast, the group
will cover approximately 200 miles in two
weeks and climb the equivalent height of
MountEverest.
They are looking to raise money for the
Company of Actuaries Charitable Trust
(CACT) in its support of mathematics
education, and also the work of the Udaan
School in Mumbai and the childrens
charity Kidz2gether, which specialises in
Coast to
Deaths
John Edward AGER died recently, aged 81. He
became a Fellow of the Institute in 1958.
Norman Joseph Deryck AMES died recently, aged
68. He became an Associate of the Institute in 1979.
Derek Glanvile MILLARD died on 15 February 2013,
aged 75. He became a Fellow of the Institute in
1964.
David WILSON died on 2 March 2013, aged 67. He
became a Fellow of the Institute in 1968 before
transferring to A liate membership in 2011.
The Actuary, in conjunction with the Worshipful Company
of Actuaries, has been running a campaign to target 1m
through the fundraising activities of actuaries and we would
be delighted to hear about your charitable work or activities.
Please email Yvonne Wan at social@theactuary.com or
Charles Cowling at charles_cowling@jltpcs.com
Dont forget the Staple Inn Actuarial Society will match 25% of
monies raised by individuals and 50% of monies raised by teams
from more than one employer, up to a maximum of 300.
Full terms and conditions and an application form, can be found
at www.sias.org.uk/aboutsias/Charity
By Chris Marsh
The SIAS 2012 Dance Night was held in
London on 21 February at Revolution,
America Square. It was the perfect setting
for the evenings events, with exposed
brickwork, wooden oors and Clint
Eastwood classic The Good, the Bad and
the Ugly showing on the at screens to get
everyone in a cowboy mood. Not that
they needed much encouragement
everyone certainly looked the part.
Following the welcome drinks, the band
played an extended introduction to break
the ice with some easy dance moves such
as Swing your partner and Promenade.
Surprisingly energetic, it had everyone
topping up their cocktails to quench their
thirst! Following an intense hour and a
quarter of dancing to increasingly
complex routines, the arrival of food
provided a welcome break so everyone
could catch their breath.
Throughout the night, the band
commented on how surprisingly good
the group was. With that in mind, they
launched into a particularly complicated
routine called the Cumberland Square
Eight, where the room split into groups
of eight, each subdivided into two pairs
of four. There were several moves in
this routine, the rst being a Right/
left arm star and the nale being the
Basket, which sounds easier than it was!
This comprised two couples, with the
guys facing one another, placing their
hands around the girls waists and the
girls placing their hands over the guys
shoulders, spinning fast enough so the
girls feet left the ground. Not one for the
faint hearted!
But it didnt end there later routines
included my personal favourite, Dipping
and diving. And everyone got into the
spirit of the night so well that Im sure I
even heard a Yee-haw or two!
Thanks to the brilliant Nellie Belles
band, Revolution, and all those who came
along. We hope to see you at the next SIAS
dance night on a dance oor near you!
Sadly... Keep up your good works
News
People & Society
If you have any newsworthy items
for these pages please email
social@theactuary.com
Dosey doe and dont let go!
SHUTTERSTOCK / ISTOCK
p16_17_apr_soc_news_SEMIFINALCT.indd 16 22/03/2013 08:40
www.theactuary.com
coast challenge
Alix Frost is running the Virgin London
Marathon on 21 April 2013 to raise funds
for the Primrose Hospice Centre of Care.
The hospice provides care to adults
living with life-threatening illnesses in
Redditch, Bromsgrove and was a huge
support to Alix. They oered her a lifeline
during her recent treatment for invasive
cancer, when she was at her lowest point,
enabling her to complete the treatment and
give herself the best chance of survival.
Alix is fortunately now in a position to
be able to give back to the hospice. She has
returned to work and to recreational
running. Despite having never run even a
half marathon, Alix is training hard and is
determined to do her best. We wish her the
very best of luck.
If you would like to sponsor Alix, please
visit www.justgiving.com/alixfrost
Find out more about Primrose Hospice at
www.primrosehospice.org/home
The fourth annual Livery Company Skiing
Competition took place in Morzine in
France in January. With over 100 skiers
from 17 livery companies, this was one
of the largest competitions to date.
The Actuaries put forward a team of
ve, consisting of Jerry Staurth, Tony
Leandro, George Yoxall, Richard Hawkes
and Fiona Morrison. Unfortunately, they
missed out on the Actuaries Cup, which
was won by the Leathersellers.
The next competition will be held in
Morzine on 24 and 25 January 2014. All
levels of skiing ability are welcome.
For entry details, please contact Fiona
Morrison ona.morrison@lcp.uk.com
Hit the slopes
Li ke The Actuary on Facebook Fol l ow @TheActuaryMag on Twi tter
Despite bitterly cold temperatures, the sun
emerged briey on 28 February for the
unveiling of the Staple Inn sundial,
commissioned and presented by the Staple
Inn Actuarial Society (SIAS) to Philip Scott,
president of the Institute and Faculty of
Actuaries, to celebrate the SIAS centenary.
On presenting the sundial, SIAS
chairman Martin Pike commented: It
also recognises time as something thats
important to actuaries. We help our clients
deal with liabilities that become payable
many years in the future.
For the full report, visit www.theactuary.com
Giving and
receiving
We would be delighted to hear from
you if you have any newsworthy
items for these pages. Please contact
Yvonne Wan at social@theactuary.com
un
le
tt,
y.
ts
ry.com com
Joi n The Actuarys Li nkedI n group
Staple Inn sundial marks centenary
Philip Scott, president of the Institute and Faculty of Actuaries, addresses the gathering at Staple Inn
support for children with autism and
autistic spectrum disorders.
Charles is pictured with some of the
children from the Udaan School, most of
whom come from families who have never
received any formal education. The Udaan
School provides these children an
education that is unavailable elsewhere.
Without this, the children would end up on
the streets, in very low-paid hard manual
work or married by the age of 13 or 14.
Charles says: The school and the people
at Udaan are an inspiration. In the face of
huge challenges and some real hardship,
the teachers and pupils alike are bright,
charming and delightful. This is a chance
to make a huge dierence to peoples lives.
Also pictured are teachers Malkawa
Bomidi and Divya Dubey, both of whom,
as previous students at the Udaan School,
exemplify what the school is able to
achieve in giving these children a chance
to realise their dreams and aspire to jobs
and career opportunities, such as teaching,
that would otherwise not be possible.
The team has set the very ambitious
target of raising 30,000 for these hugely
important causes and your support would
be very much appreciated. Best of all, JLT
has agreed to match all donations pound
for pound, up to the rst 5,000, ensuring
that your charity goes even further.
For more information or to donate, go to
uk.virginmoneygiving.com/team/wca
p16_17_apr_soc_news_SEMIFINALCT.indd 17 22/03/2013 08:40
MORE EVENTS ONLINE
For details of events, visit
www.sias.org.uk
SIAS IS ON TWITTER!
Follow us on @SIAScommittee for latest
news on meetings, socials and more!
SIAS
Events
MONDAY 13 MAY PROGRAMME EVENT
Assumption-setting process for
estimating annuity liabilities
John Kingdom, FSA
Staple Inn,
High Holborn,
London WC1V 7QJ
5.30pm
Stochastic mortality models, such as the Lee-Carter and Cairns-Blake-Dowd models, are commonly
used to model future mortality rates and the evolution of these under run-o. However, we are
increasingly seeing rms attempt to model longevity risk over a one-year horizon.
This presentation discusses a high-level view of the assumption-setting process for estimating
annuity liabilities and the range of risks that need to be considered when modelling longevity risk
under a one-year value-at-risk (VaR) framework. We also compare this approach with using a
standard run-o approach, and illustrate, via a simplied numerical simulation, why simple
0.995^n-type approaches used to approximate a one-year stress from a standard run-o
approach are not necessarily appropriate.
This presentation will help younger members understand the assumption-setting process for
estimating annuity liabilities, and the risks that are related to this process in a one-year VaR context.
Refreshments will be served from 5.30pm and the talk will start promptly at 6pm. There is no need
to register in advance for this meeting.
THURSDAY 23 MAY SOCIAL EVENT
Mystery event
7pm
Save the date for our mystery event!
More information on this event will be available on the SIAS website (www.sias.org.uk).
TUESDAY 30 APRIL PROGRAMME EVENT
Solving solvency: insurance
capital management in a
changing regulatory landscape
Dr Matt Modisett & Christopher Hursey
Staple Inn,
High Holborn,
London WC1V 7QJ
5.30pm
Whether lowering capital requirements or increasing earnings on capital, risk management is the way
to reach your goal. Solvency II and the current Individual Capital Assessment both equated risk and
capital requirements. So, what are some methods for managing capital? This presentation will discuss
both basic and innovative ways to reduce capital requirements and to raise capital earnings. It will also
present how dierent capital projects can be managed and prioritised for optimum eect.
The rst half of the discussion will give an overview of capital requirement calculations, and an
introductory, conceptual explanation to capital management strategies. The second half will discuss
practical considerations, drawing on some of the concepts and ideas introduced in the rst half to
devise a basic blueprint for implementation.
The event is appropriate for younger members, as it discusses high-level strategic issues without
requiring in-depth technical knowledge. Topics covered include:
the two goals of capital management;
lean is not lite;
spiral of capital savings;
materially large vs materially manageable;
sample savings;
diversication;
true-risk strategies;
systems, assumptions and incentives.
Refreshments will be served from 5.30pm and the talk will start promptly at 6pm. There is no need to
register in advance for this meeting.
www.theactuary.com
SIAS IS ON FACEBOOK!
Check out the SIAS Facebook page for
photos from the latest social events
S
A
V
E
T
H
E
D
A
T
E
!
18
p18_apr_sias_events_SEMIFINALCT.indd 18 22/03/2013 08:41
19
www.theactuary.com
Nick Silver nds out why
John Kay, author of the
2012 review on equity
markets, believes that,
although the current system
is fated, everything will be
alright in the end
SAM KESTEVEN
THE
MI LD- MANNERED
PROPHET OF
DOOM
On my agenda
features@theactuary.com
p19_22_apr_Q&A_silver_SEMIFINALCT.indd 19 22/03/2013 08:41
20
www.theactuary.com
A small terraced house in the hinterland
between Londons Marble Arch and the
Edgware Road does not seem like the sort of
place where you might expect to nd a leading
economist. But professor John Kay is not a
typical economist: he has been a fellow of St
Johns College, Oxford, since he was 22; a
director of the Institute for Fiscal Studies; he
was the rst director of Oxford Universitys
Sad Business School; and he has also set up a
successful economic consultancy rm.
Alongside that, he has written weekly
columns for the Financial Times for 17 years.
More recently, he has been in the public eye
having been commissioned by the
government to carry out an independent
review of the eects of UK equity markets on
the competitiveness of the economy,
published as the Kay Review in July 2012.
If I didnt know that the slight, genial
gentleman settled down opposite me was a
professor of economics, I would imagine him
as a specialist physician, detailing why a
patient had only six months to live with
comforting assuredness. During our
conversation, he gently and politely dissects
the state of the equity markets and nancial
services, the UK economy and the economics
profession in his soft Scottish accent and
oers his thoughts on actuaries.
Kay on Kay
When asked what had rst attracted him to
economics, Kay explains that he started out
studying for a maths degree at Edinburgh
University. Having worked for a summer in
the school holidays at Scottish Widows,
calculating surrender values, his assumption
was that he would become an actuary.
However, on taking a subsidiary course in
economics, he decided he was more interested
in practical aairs and ended up studying
economics at Oxford. Asked why he had opted
for such a varied career, rather than sticking to
being an academic economist, his response is
simple. The idea of doing the same thing all
of my life was a bit daunting, he says.
His particular skill, he continues, is the
popular exposition of complicated ideas.
Throughout the conversation, I form the view
that is a two-way street rather than being
stuck in a hermetically sealed world of
academia, Kay has much practical exposure to
the real world. This feeds back into his
academic work, potentially changing his
views on how the economy works.
Although he professes to not having any
other major passions in life besides my work
and walking, where I do my best thinking,
Ihave the impression that Kays work is so
wide-ranging that this encompasses
multipleinterests.
Kay on banking
My opening salvo is to ask him about his most
recent FT column, in which he wrote that the
reputation of nance has been degraded by the
actions of a few. But the few have been running
the show, and have imposed inappropriate
values on once respected institutions.
He explains that, during the big bang, retail
banks took over rms engaged in wholesale
nancial activities. But the retail banks
couldnt control the investment bankers, who
were richer and smarter, and so they ended up
running the show, he says. The only way to
stop this, he continues, would be to have a
politically driven restructuring of the nancial
service sector a surprising answer, as the
Kay Review was pretty limited on government
intervention. Instead, we are seeing the
proliferation of a style of regulation that has
plainly failed.
Although he has seen change in the past
year among politicians and with public
realisation that what went wrong resulted
from the ethos and structure of the industry
he says there is an endemic culture in
nancial services that makes it incapable of
learning from other disciplines.
Sciences that study systems for example,
engineering or biological systems have
developed a sophisticated understanding of
how systems actually work. In an ecosystem,
monocultures are the most vulnerable and
this is exactly what we have in banking, made
worse by the current style of regulation, which
freezes the evolution of the system,
preserving the dinosaurs.
21
www.theactuary.com
The current style of regulation
freezes the evolution of the system,
preserving the dinosaurs
who understood a bit about it on people who
understood less, he says. This typied much
of the nancial services sector.
So when he observed the credit instruments
between 2003 and 2007, it was with a sense of
dj vu, knowing how this would end. His
conclusion was that most nancial market
trading was the product of information
asymmetry rather than dierent risk
preference and risk attitudes as assumed by
the capital asset pricing model and the
e cient market hypothesis. Financial
markets are currently explained using models
that cannot conceivably account for the
volume of trading that takes place in them.
The other experience that led to his change
of mind was carrying out some research on
London casinos. He found that the typical
gambler was a successful, entrepreneurial
businessman. Far from being there for the
thrill of winning, or losing, money, these
people actually believed that they could win.
He realised he was observing the upper tail
of a distribution of people who were
aggressive risk takers, yet nave about the risks
they were taking the businessmen one sees
in the casinos are the ones successful enough
to have enough money to lose.
These same people provide the underlying
dynamics of capitalism. They are not rational,
they do not understand risk and are therefore
prepared to take risks that a rational agent
would not take. And it is these people who
drive the growth of the economy. Again, this
entirely contradicts economic theory in which
agents are assumed to be rational; it is the
irrational agents that drive the markets.
Kay is not the only critic of mainstream
economists, and it would seem patently
obvious that economics has failed as a
predictive and explanatory tool. Was the
profession changing? Could there be an
Einstein moment approaching, where the
mainstream realises that the cranks were
right? No, says Kay. Unlike subjects such as
physics, you cannot denitively prove
economics wrong. The rewards structure of
the economics profession is basically a
common value system, he says. Small
marginal improvements are rewarded, critics
are considered cranks and ignored.
But surely economists would become
increasingly irrelevant as there would be
decreasing demand for models that just do
notwork? Once again, Kay thinks not.
People are continuing the use of value at risk
models, he says, although these plainly
failed, because extreme observations come
from o-model events, not from improbable
events within models.
He cites the Goldman Sachs executive who
said they were seeing things that were
25-deviation events, several days in a row.
This was obviously not the case, says Kay.
They were seeing events that were not in
Goldman Sachs model. What interests Kay as
a result is exploring the limits of probabilistic
reasoning something that has been
discussed since the 1920s but has still not
been taken on board.
Kay on equity markets
The subject of the Kay Review was how equity
markets aected the economy as a whole. One
of the ndings was that companies rarely raise
money in the stock market. But part of the
purpose of savings, according to economic
theory, is also to provide investment capital,
which allows the economy to grow. Kay
thought that this was no longer the case, as
companies no longer needed to raise large
amounts of capital.
Companies such as Facebook or Google are
capital-light and generate their own cash,
which they can invest themselves, he says.
The main capital allocation decision in the
economy is therefore taken within companies
by company management, not by the capital
markets. Most of the large-scale investment of
the modern economy is required by
government, for areas such as health,
education and infrastructure.
The main economic function of the equity
markets is not, therefore, to allocate capital
e ciently, but to ensure that company
management makes the correct capital
allocation decisions.
Kay champions the concept of
stewardshipasset owners that have a close
relationship with the management of
companies they own, overseeing the
allocation of capital in a manner that will
On my agenda
It turns out that Kays optimism is
predicated on the inevitability of another
crisis, as the current banking business model
is a proven failure, which will basically wipe
out the nancial system so we can start again.
Kay on economics
I read another column by Kay a while ago in
which he wrote that he used to teach modern
portfolio theory, but that he no longer
believed in it. Asked what changed his mind,
he takes us back to the early 1990s, when he
was involved with the restructuring of the
Lloyds Insurance market, following the
London market excess of loss (LMX) spiral.
What had been going on was not the
spreading of risk to reduce the cost of risk
bearing, but the dumping of risk by people
SAM KESTEVEN
22
www.theactuary.com
result in the long-term growth of the
company. This is the only way in which
theinvestment management industry can
addvalue.
Competing with each other on relative
short-term performance is a zero-sum game,
says Kay, which is of no social value or value to
their clients as a whole. At present, asset
managers either do not focus on long-term
growth or, worse, they actively encourage
companies to behave in a more short-term
fashion, undermining long-term value. By and
large, therefore, the asset management
industry has not been doing its job.
Doesnt that make the Kay Review an
indictment of modern capitalism, I ask? After
all, economics teaches us that peoples
earnings are based on how much they are
worth to society, yet the head teacher of my
daughters school earns a small fraction of
what most people working in the equity
markets earn, despite her obviously socially
important job. The Kay Review argues that
what people working in the equity markets do
is mostly useless, sometimes positively
harmful, with most workers either not doing
their jobs properly or not doing them at all.
Kays answer is that capitalism is working,
but not necessarily perfectly; the most
successful economies are obviously based, to
a large extent, on free markets. But the UKs
nancial services system is currently not
serving the rest of the UK economy very well.
As a result, the UK has become a global centre
that is quite good at manufacturing a
particular set of products, which are of
doubtful value, but which are mostly bought
by foreigners. This is the modern moral
dilemma of our society.
Kay on actuaries
Before this interview, I searched the Kay
Review and found no mention of the word
actuary and only one of actuarial. From our
subsequent discussion, I can conclude that he
lets us o lightly.
When Kay had his rst interaction with the
profession over 20 years ago, he felt that
actuaries were blissfully unaware of
nancial economics. But, since then, he says,
we have adopted them wholesale in a
particularly naive and uncritical way.
He believes that people best deal with
uncertainty, as opposed to risk, through
narratives rather than probability
distributions. For instance, the legal
profession uses terms such as balance of
probability and beyond reasonable doubt.
We might surmise, says Kay, that these
could be translated into probabilities the
former greater than 50%, the latter greater
than, say, 99%. But this is not the case at all,
he continues. Legal reasoning places the onus
on the ability to tell a consistent and
convincing story, and the judgment is based
on what degree of condence the judge or jury
has in the story. On balance of probability
means which story is the most convincing.
Beyond reasonable doubt means the story is
a clear and convincing narrative of events.
What Kay would like to see from actuaries is
for them to exercise judgment and frame
these in convincing narratives.
Another example he uses is taken from
Malcolm Gladwells book Blink: The Power Of
Thinking Without Thinking. A Greek statue in
Californias J. Paul Getty Museum was easily
recognised by experts as a fake, but it was very
di cult for them to explain why they thought
this they just knew. Because of uncertainty,
there cannot be an objective truth; expertise is
exercising a subjective judgment based on
experience, not the ability to run a model.
Kay on the way forward
For investment consultants and asset
managers, the Kay Review is little short of
devastating. So what does he suggest?
To start with, he says, the methods for
picking asset managers and the mandates that
they are set are a long way from perfect. First,
the theoretical underpinning of current
practice for example, investing against a
benchmark and dening risk as deviation
from that benchmark follows the e cient
market hypothesis and the capital asset
pricing model, both of which Kay thinks are
nonsense. Second, mandates should be based
on styles and strategies that look compelling.
In Kays view, pension funds should invest
in a smaller selection of companies, with
whom they should be in close contact, either
directly or indirectly via the asset managers,
the key concept being stewardship.
He believes that asset managers should be
selected for their convincing narrative. They
should not be reporting or judged upon
quarterly returns against other managers, as
this is not in beneciaries interests, Kay says.
Instead, he continues, they should be judged
over, say, three years on whether they are
investing in line with their stated narrative
and how this is evolving through time.
The investment consultant should exercise
professional judgment on which narrative is
the most convincing.
Asked whether this was something
actuaries could do, Kay suggests we do not, at
present, have the right skills set. Instead, the
work should be undertaken by asset managers
who understand the competitive advantages
and evolution of companies.
Kays message for actuaries is that we
should distrust our models what is not in
our models is often more important than what
is. And we should develop narratives of what
might happen rather than relying on
spuriously accurate mathematical projections
based on past experience. Equally, we should
not blindly follow methodologies implied by
nancial economics.
In conclusion, the Kay Review has been
described as good on diagnosing problems but
not on solutions. This impression is
strengthened by our conversation, as Kays
ultimate solution seems to be based on little
more than the inevitability of another crisis,
after which everything will be ne. Not a very
comforting message, perhaps, but I think we
should listen carefully to the diagnosis of this
most mild-mannered of Cassandras. a
On my agenda
Develop
narratives of what
might happen
rather than relying
on spuriously
accurate
mathematical
projections
As Solvency II faces further delay to 2016 or even later, rms are
looking to reap the benets from their signicant investments
in capital modelling.
This trend is changing the game for capital modeling actuaries:
before, it was like a 200m steeplechase with companies investing
to meet a series of deadlines; now, it is more similar to a 5,000m
distance run. Capital modellers still need to cover the distance
but must become leaner and more efcient as management
expects more reporting on a continuous basis with less resource.
A few years ago companies produced results four times a year.
Now companies are running up to 500 capital calculations a year.
This increase in throughput has, up until now, been achievable
with the extra resource made available from Solvency II
programme streams. Today, one of the key challenges facing
capital modellers is how to maintain the same level of analysis
throughput when operating as business as usual.
Introducing TeamCentre
This is driving a need for industrialisation of much of the
modeling process in particular the automation of data into and
out of the calculation kernel. In response, Aon has introduced
TeamCentre for ReMetrica. This provides data and analysis
management tools to help companies manage the huge volume
of input parameters, models and results required. It ofers a
controlled, centralised environment for the various roles and
responsibilities of an efcient and well-organised modelling team.
For a demo, visit: aonbeneld.com/remetrica_demo
Going the distance in Capital Modelling
Empower Results
Analyst
Manager
Data
Provider
Audit
ReMetrica
Calculation
Kernel
Data and Model
Governance
TeamCentre
Visit www.theactuary.com to see how weve changed
Business Critical
As a self-respecting actuarial professional, youll no
doubt want to keep up with the latest industry
developments, people and society updates and
professional news.
But youre also busy being an actuarial professional.
Right?
Thats why The Actuarys weekly email alert brings
you a handy round-up of only the most relevant
news stories and comment, straight to your inbox,
every Thursday.
ACT.04.13.023.indd 23 22/03/2013 08:56
Pensions
Long-term strategy
In the past decade, many dened benet
pension schemes have been pondering
journey planning and de-risking ight paths
as they plan for a long-term end game, often
based on a buy-out or self-su ciency. The
time frame could stretch out to 20 years-plus.
However, while people may well be living
longer, we are most certainly not staying in
our jobs for as long as our parents. The
average tenure of a FTSE 100 chief nancial
o cer (CFO) in the UK is around ve years [1]
and for a chief executive is 4.9 years [2]. Even
member-nominated pension scheme trustees
often have a dened term of o ce of not
more than ve years without re-election.
Given that the key decision-makers in
pension schemes have a term of o ce of
around ve years, why do we insist on talking
about a strategy stretching over 20 years?
Is there a dierent angle from which we can
look at this to better align the interests of
these decision-makers with a successful
outcome for the pension scheme?
If you were taking charge of a company as a
CFO, the rst things you might consider are
likely to hinge on the macro-economic
environment you might face in the next ve
GETTY
www.theactuary.com
Anyone approaching
retirement age should
be planning their future.
But can pension
schemes get better
results by focusing on
the present, ask
Celene Lee and
William Zimmern
moment?
Living in the
p24-25_apr_pensions_SEMIFINALCT.indd 24 22/03/2013 08:42
CELENE LEE is a pension
risk and investment actuary
in PwCs pensions team.
WILLIAM ZIMMERN is a
macro-economist in PwCs
economics team
years and how you can make the most of your
tenure against this economic backdrop.
Right now, one of the key factors that will
aect dened benet pension schemes is the
aftermath of quantitative easing (QE). As a
country, we have not been here before, so we
have little idea how QE will unfold in practice.
As we can see from Figure 1, gilt yields have
fallen signicantly while QE has been in
place. Although the equity market has picked
up over the same period, this has not been
enough to compensate for the impact that
declining gilt yields have had in increasing
the values placed on pension liabilities. As a
result, a sample scheme invested in a 60%
equity/40% bond allocation is still almost
20% below its pre-crisis funding level.
The rst tranche of QE was implemented in
early 2009, with the second phase between
2011 and 2012. In total, the programme has
injected 375bn into the UK economy, with
the Bank of England (BoE) now holding about
a third of the total UK gilts in issuance,
leading to a distortion in the gilt curve. Many
organisations such as the National
Association of Pension Funds (NAPF)
continue to lobby that QE has resulted in an
unprecedented increase in the value of
pension liabilities in the region of 270bn [3].
Many people are expecting some level of
reversal to the gilt curve, as, according to the
law of common sense, what goes down must
come up. But the unwinding of QE may not be
as straightforward as a reversal of the gilt
curve. To begin with, we could look at three
key considerations as to how QE might
unfold: the macroeconomic environment in
which QE might be reversed; the actions the
BoE will take to implement the reversal; and
at what speed might the reversal take place.
A number of scenarios would support the
case for withdrawing monetary stimulus,
including the return of sustainable growth in
the economy with some acceptable level of
inationary threats, given that the BoEs
primary aim is to control ination.
However, there are potential stumbling
blocks. First, signs of the beginning of a triple
dip can be disguised by early green shoots.
Any misinterpretation of the early signals
could lead to the Bank raising interest rates
too soon. If there is a genuine triple dip and
we are in a prolonged recession, the Bank
may be forced to react once again. But how?
With interest rates close to rock bottom and
rounds of QE already implemented, the Bank
may have no choice but to attempt to
implement further rounds of QE. However,
the extent of the existing programme means
that the Bank would risk losing its credibility,
if it has not done so already. Some might
question the eectiveness of QE and the
damage it will continue to cause to the
underlying long-term health of the economy.
Second, how will the Bank unwind QE? One
possibility is that the government could simply
cancel the bonds held by the Bank and there has
already been some speculation appearing in the
nancial press and blogs [4]. The government
would then not need to pay interest on those
gilts, but the Bank would be left with a 375bn
hole with no assets to back it. The consequence
could be vast, not least because there will be a
no-condence vote in the system as the Bank
would be seen to have nanced the
governments debt by creating money.
And, third, what about timing? If the risk of
triple dip subsides, the sudden reversal of
interest rates to pre-crisis levels could cause
serious issues for the private sector or
households with variable mortgage rates,
pushing the economy back into recession.
Weexperienced this to some extent in the UK
when interest rates were raised from 8% to
15% between 1988 and 1990, which was
followed by GDP growth falling from 5% to
-1.4% in 1991.
An unclear strategy from the Bank as to
how monetary stimulus will be withdrawn
will hinder both pension schemes and
businesses in planning for the next few years.
While the lack of action will mean that the
short end of the curve will run its course, the
long-end gilt curve may continue to stay low
for some years while the Bank ponders the
right action. As Andrew Sentance, senior
economic adviser at PwC and a former
member of the BoEs Monetary Policy
Committee, has suggested, an announcement
by the BoE of an orderly intention to raise
rates would go a long way to help the country
adjust to this new normal, but the Bank may
be reluctant to do this.
Further, for pension schemes it could be a
double whammy. Low interest rates have
already led to the pound weakening, which
could lead to high ination for the UK rather
than increasing exports, due to the
inelasticity of UK exports. A combination of
continued low gilt yields and high ination
could be very damaging.
Combining macroeconomic insights with
traditional asset-liability modelling oers a
powerful way to carry out a reality check
between what might be achievable in the
medium term against our long-term target.
Ittakes us away from the unquestioning
mindset of long-term returns without having
a view about the shorter-term and sometimes
brutal reality we try so hard to ignore. a
REFERENCES
[1] According to the Curzon Partnerships
analysis in 2012
[2] According to data from Manchester Square
Partners between 2002 and 2007
[3] Exceptional Times, Exceptional Measures?,
NAPF, March 2012
[4] See debate at bit.ly/cancelgilts
Figure 1: Gilt yields and UK equity performance since the nancial crisis and a sample schemes funding level assuming
a 60:40 asset allocation of equities and bonds
01/05/2007 01/05/2008 01/05/2009 01/05/2010 01/05/2011 01/05/2012
0%
1.00%
2.00%
3.00%
4.00%
5.00%
50%
60%
70%
80%
90%
100%
110%
FTSE all share (LH scale)
Funding level (LH scale)
Over 15 yr gilt (RH scale)
www.theactuary.com
p24-25_apr_pensions_SEMIFINALCT.indd 25 22/03/2013 08:50
Enhanced annuities
An enhanced annuity pays a higher income
to individuals who have a medical condition
that might reduce their life expectancy.
Generally, individuals will qualify for an
enhanced annuity if they can answer yes to
one of the following questions:
Do they smoke cigarettes?
Do they take prescription medication?
Have they been to hospital recently
for a medical condition?
There are three categories of enhanced
annuities: lifestyle, enhanced and impaired
life. Table 1 explains these dierences and
notes the common medical conditions for
each type. As the market for enhanced
annuities increases, a number of key issues
and trends can be identied that will
inuence its future.
Increased market share
About 14bn of pension funds are invested in
annuities every year, with an average fund
size less than 30,000. In 2012, sales of
enhanced annuities represented about 40%
of the total market, with sales totalling 5.5bn
a signicant increase from a 10% market
share in 2004, arising from increased supply
and marketing activity.
However, the increase in sales has aected
the pricing of standard or good health
annuities. While di cult to quantify, as
enhanced annuities have attracted unhealthy
lives, the mortality cross-subsidy element of a
standard healthy annuity has fallen. This has
had a dual impact on the market.
First, it can be viewed that value is being
transferred away from people in good health
to those in poorer health. In time, this may
aect individual behaviour and the advice
they receive. People with above-average
funds and in good health may be advised to
consider annuitising funds at an older age or
to invest in drawdown products when they
rst retire. The move towards later
annuitisation is also being inuenced by the
current low levels of bond yields, resulting in
the lowest annuity incomes in living memory.
Second, we are fast reaching a point when
the majority of annuities will be underwritten
in some way. Insurance companies are clear
that they cannot use medical underwriting to
overcome the ban on gender-specic pricing,
but they will be looking at more ways to
dierentiate between future annuitants on
the basis of health, accelerating the amount
of underwritten annuities.
As the enhanced market grows, the
distinction between lifestyle and standard
www.theactuary.com
Billy Burrows oers an advisers perspective on
the value of enhanced annuities for customers
and examines what the future holds
HEALTHY
CHOI CE?
p26-27_apr_burrowsSEMIFINALCT.indd 26 22/03/2013 08:43
BILLY BURROWS is
a director of the Better
Retirement Group and
the Retirement Academy
GETTY
annuities will become more blurred. Most
60-year-olds have some type of medical
complaint that will meet the ever-widening
range of qualifying medical conditions for an
enhanced annuity.
Better use of technology
As the number of annuities arranged using the
open market option increases, a number of
dierent annuity broking models are emerging,
including scheme-specic broking services,
web-based annuity supermarkets and
direct-to-customer propositions. All of these
models have used technology to cut transaction
costs and improve client communications.
The most obvious use of technology is in
customer-facing annuity quotation systems,
often referred to as annuity supermarkets, that
allow clients to enter their own medical data.
However, many clients do not understand
annuity options su ciently well to have the
condence to purchase online. Therefore these
systems work better as an education tool than a
business tool.
In addition, current annuity quotation
systems take account of only a limited number
of medical conditions and cannot be relied on to
produce the highest annuity income for a
particular range of medical conditions. Those
that capture more in-depth medical information
often do not have systems sophisticated enough
to produce competitive quotations.
This second point is being addressed by the
next generation of annuity quotation systems.
These will capture comprehensive medical
information and transmit it directly to the
insurance companies to underwrite.
Another challenge to these supermarkets is
to widen the limited range of products on their
virtual shelves to include products such as
investment-linked and xed-term annuities.
Collection of medical data
Traditionally, medical information has been
obtained from individuals by completion of a
quotation request form. But paper forms take a
good deal of the applicants time and eort and
act as a barrier to the growth of enhanced
annuities. In order to make the process easier,
applicants have been oered the opportunity of
a telephone interview.
There are three types of telephone interview:
1. Those provided by insurance companies,
where a qualied underwriter will interview
the individual applicant.
2. Those oered by specialist companies, which
use nurses to interview applicants.
3. Those oered by advisory rms, which use
medically trained interviewers or train their
own sta to conduct the interviews.
As well as the obvious advantage of avoiding
completion of a paper form, telephone
all-time low, more commentators are asking if
annuities are the most appropriate policy for
converting pensions into income.
Annuities will probably remain the product
of choice for most people at retirement, but
people with above-average pension pots may
be better o considering other options.
The advantages of the extra income from
an enhanced annuity will quickly disappear if
the annuity was the wrong policy in the rst
place. While it is very important to shop
around and to get the highest income, it is
also important to make sure that people know
what they are shopping for. a
interviewing should improve the quality and
consistency of medical information. For
example, a nurse will be able to help
applicants explain their medical conditions
and will be familiar with their medication.
And many applicants may be able to explain
the state of their health more accurately with
the help of a nurse compared with what they
would write on a paper application.
Future of enhanced annuities
It is tempting to see the future as being linked
to the development of more sophisticated
online solutions. Although technology has an
important role to play, many people will not
buy an annuity without rst speaking to an
adviser. If this is the case, the earlier they
speak to an adviser, the better the chances of
the most favourable outcome. Technology
will have more impact in the back o ce.
Enhanced annuities will continue to
increase in market share until almost all
annuities will have an element of medical
underwriting. But with annuity income at an
Graph 1: Single life level annuity purchased with 100,000 for 65-year-old man. Annuity income for a range of medical conditions
3,000 4,000 5,000 6,000 7,000 8,000 9,000 SOURCE WWW.BRGL.CO.UK FEBRUARY 2013
5,688 Best good health annuity
High blood pressure (180/100)
Cancer (lymph nodes)
Angina only
Type 2 diabetes
Smoker (20 a day)
Angina and smoking
Chronic pulmonary disease
5,688
5,688 676
368
0
5,688 783
5,688 1,035
5,688 1,072
5,688 1,448
5,688 2,357
Healthy annuity
Medical enhancement
www.theactuary.com
Most 60-year-olds have some type of medical
complaint that will meet the ever-widening
range of qualifying medical conditions
TABLE 1 Lifestyle annuity Enhanced annuity Impaired life annuity
Description Takes into account certain
behavioural and environmental
factors that may reduce life
expectancy
For those with medical
conditions that may reduce
life expectancy and where the
information can be obtained
directly from the client
Similar to enhanced, but where
the medical conditions are
more serious and a doctors
report has to be obtained
Medical conditions Smoking higher frequency and
longer history
Overweight / heavy drinking
High blood pressure
High cholesterol
History of heart attacks, angina
or heart surgery
Chronic asthma
Digestive or bowel complaint
Bladder or liver complaint
Life-threatening cancers
Major organ diseases, eg liver
or kidney
Other life threatening
illnesses such as Parkinson's,
multiple sclerosis and strokes
p26-27_apr_burrowsSEMIFINALCT.indd 27 22/03/2013 08:43
Positive health
www.theactuary.com
Gordon Woo looks at
annuity pricing of
human resilience
OF WE ALTH
Actuarial assessment of impaired or
enhanced annuities focuses on specic
medical conditions or lifestyle factors that
reduce life expectancy. The assessment of
negative health conditions that hasten death
oers an important but still rather narrow
perspective on mortality. This assessment
could be broadened to include positive
human factors that sustain and extend life,
and help to make individuals resilient.
Depending on these positive human factors,
the lifespan of two relatively similar
individuals may vary signicantly.
With engineering systems, safety analysis
traditionally focuses on the risk of things
going wrong. But a modern supplementary
approach focuses instead on what keeps
systems functional. This is resilience
engineering [1]. A tenet of resilience
engineering is that a system is safe if it can
adjust its functioning prior to, during, or
following changes and disturbances, so that
the required operations are sustained under
both expected and unexpected conditions.
Air safety is not just about what can cause a
plane to crash; it is also about the capability
of the pilot to keep a plane airborne.
Similarly, human longevity is not just about
pathology and frailty, but is driven also by
cognitive, psychological and social factors
that keep people advancing purposefully
through life. These basic human resilience
factors supplement the physical health
factors that have been elucidated over the
past half-century, starting with the classic
longitudinal Framingham heart study in the
US. Yet health-related information from
prospective underwritten annuitants rarely
extends to gauging their state of cognitive and
social functioning or positive well-being.
p28-29_apr_woo_SEMIFINALCT.indd 28 22/03/2013 08:44
DR GORDON WOO
is a catastrophist at
RMS LifeRisks.
CHRIS DUNN
www.theactuary.com
AND HE ALTH
Fortunately, a number of longitudinal
studies of cognitive, psychological and social
factors have recently been published. For
example, in 2011, a University of St Andrews
paper quantied the widowhood eect on
mortality risk. Using mortality statistics from
the Scottish Longitudinal Study of 58,000
married couples, the paper found that the risk
is highest shortly after widowhood, but
remains raised for at least 10 years.
Mental health or no health
Preservation of cognitive functioning is
critical to successful ageing. Rapid loss of
cognitive faculties often signies medical
decline and heightened mortality risk. Many
activities that inuence longevity are very
cognitively demanding. New medical
treatments may require self-monitoring and
complicated self-medication. Chronic disease
patients must make many choices daily that
have major implications for their health.
Mental stimulation, such as reading and
conversation, is important for maintaining
cognitive function. Brain training studies
show that the cognitive biological age of an
individual can be lowered in relation to
chronological age. Keeping psychologically t
through mental activities leads to improved
cognitive health in old age. Brain plasticity
research by Californian neuroscientist
Michael Merzenich has demonstrated that
cognitive age reduction is achievable even for
older people with mild cognitive impairment.
It pays to stay positive
Positive psychology is the study of human
ourishing, and focuses on personal traits
such as well-being and happiness, rather than
on problems, which is what people tend to
think psychology is all about. Like a resilience
engineer, a positive psychologist concentrates
more on what is going right than wrong.
Positive psychology was founded by Martin
Seligman just 15 years ago. Researchers of
positive psychology have demonstrated that
positive characteristics or feelings, and
purpose in life, help people to live longer.
Positive feelings are especially benecial for
the longevity of pensioners, and it is hardly
surprising that the will to live is a strong
predictor of survival among older people.
While it is clear that happiness is a good
predictor of longevity, research to explain the
causal biological connection that links
well-being with longevity is still ongoing.
Signicant cardiovascular protection seems
to be achieved by satisfaction with life.
Evidence connects major stressful events to
physiological changes: stress induces cellular
resistance to cortisol, reducing the bodys
ability to regulate inammation. Laboratory
studies by Elizabeth Blackburn, the 2009
Nobel laureate, have advanced the hypothesis
that stress aects health by modulating the
rate of cellular ageing.
Social networking for survival
Isolation is a powerful risk factor for poor
health. In the US, a MacArthur Foundation
study of successful ageing showed that
friendship is a key factor in keeping older
people active and emotionally secure, even in
advanced old age. The mortality of any older
individual is contingent to some extent on the
survival of at least one peer. This implies that
a single life annuity has some characteristics
of a joint life annuity. Members of
communities that are noted for their
longevity both work and socialise together in
a close-knit fashion that helps to reinforce
good habits and behaviour. Sustained
engagement in social and productive
activities is central to healthy ageing, and is
ingrained in the most long-lived Blue Zone
communities around the world, which are
celebrated for their number of centenarians.
Social support can buer some health-
related eects of ageing. There are two main
kinds: emotional social support and hands-on
care. The latter can be essential for basic
survival. Emotional support encourages a
sense of being cared for, esteemed and valued
by others. It is especially needed to get
through serious illness and di cult
treatments, just as a nancial reserve may be.
Measuring resilience
Using methods developed in insurance risk
modelling for property and casualty insurers,
a grade index scale can be dened for each of
the three resilience variables: cognitive, social
functioning and well-being. From a meta-
analysis of the published longitudinal
studies, index values can be associated with
hazard ratios. Collectively, the three
resilience variables dene a vector resilience
metric that can elucidate key aspects of
mortality for annuity underwriting.
Mortality convergence, for example, is
partially attributable to compositional eects:
time selects out a resilient sub-population,
with a levelling in the observed mortality at
higher ages. Surviving resilient annuitants
will tend to be functioning well cognitively
and socially, have a purpose in life and a
positive sense of well-being.
Accordingly, the mortality rate observed
among surviving annuitants at advanced age
should exhibit signicantly greater degrees of
convergence. The older people become, the
more their survival depends on resilience.
Demographer James Vaupel rst
introduced the concept of a population frailty
distribution to represent the tendency of
frailer people to die younger. There is a strong
correlation of frailty between generations,
reecting its core genetic basis. Focusing on
survival rather than death, and data-mining
the domain of social psychology, we can now
dene a resilience distribution to reect the
marked population variability in cognitive
and social functioning and well-being.
Annuity underwriters may have intuitively
appreciated the signicance of these human
factors. However, lack of evidence would have
inhibited eorts to incorporate them into
pricing algorithms. Now, in conjunction with
available experience data, these factors can
be taken into practical consideration to rene
the pricing of underwritten annuities. a
[1] Hollnagel E, Woods DD, Leveson N (2006) Resilience
Engineering: Concepts And Precepts. Ashgate Publishing,
Farnham, Surrey
p28-29_apr_woo_SEMIFINALCT.indd 29 22/03/2013 08:44
Underwritten annuities have revolutionised
the insurance industry in the UK by
extracting the most out of available
information by combining existing life
underwriting manuals and the underlying
experience, disease-specic cohort studies,
patient medical records and the expert
knowledge of our chief medical o cers.
Wehave even been able to splice together
experience in a common calendar year from
diagnoses that occurred in dierent years in
the past to produce the most up-to-date
assessment of the additional mortality
associated with dierent conditions.
However, the journey is not yet complete.
Our expectations for underwritten annuities
are still based on assumptions of aggregate
mortality improvement, such as those
developed from the CMI Mortality Projection
Tool. Perhaps this could be viewed as a
reasonable approximation, particularly as the
proportion of people receiving underwritten
annuities increases, but it is not making the
best use of the information available to us.
For example, patient medical databases,
such as the General Practice Research
Database, can give us an insight into specic
conditions. In the case of heart conditions, we
can know the percentage of individuals with a
prior history of heart attack who are currently
being prescribed ACE inhibitors and statins to
manage their blood pressure and lipid balance
and how this changes over time from
diagnosis. At the same time, we have guidance
from the National Institute of Health and
Clinical Excellence (NICE) and other bodies
on what patients should receive.
We have insights through global clinical
trials as to the progress of new treatments
that could further enhance our ability to treat
cardiovascular and other diseases. We also
can learn from those treatments that have
fallen by the wayside, either because they
proved less eective than existing treatments
or because of unexpected side eects.
Global ageing challenge
We all know that the future is uncertain. The
temptation is to step back and to take refuge
in aggregate projections of the future. I would
argue that we should do exactly the opposite.
In 2012 the World Economic Forum
produced a treatise into the challenges and
opportunities that we are faced with because
of global ageing populations [1]. One of the
chapters on medical education that I
co-authored with John Wilden, CEO of Global
Health Futures, highlighted that the focus on
elderly populations and particularly on
clinical management of those with multiple
co-morbidities was insu cient and even
neglected in many countries. New strategies
are needed to train the doctors of tomorrow.
The future will be dierent to the past.
Those of us who are interested in
predictions of life expectancy need to
understand the many dierent possibilities
where further enhancements in healthy life
expectancy could occur. This is going to take
an enormous collective eort. However, there
are eorts under way. Dr Cathy Prescott, chief
scientic o cer at the Till Group and director
of Biolatris, is a strong advocate of the
potential for regenerative medicine to extend
healthy life expectancy, and brought together
a group of interested individuals from
Cambridge Econometrics, Club Vita, Munich
Re, SCOR and Swiss Re to better understand
the interest of the insurance industry and to
model the potential impact on future
mortality experience. This has now led to a
working party at the Institute and Faculty of
Actuaries with a primary focus on developing
a predictive multi-state model of diabetes and
resulting complications that can quantify the
potential benets of regenerative medicine.
Diabetes is also a key condition for
underwritten annuities. In a series of
presentations to actuarial groups in 2012 and
2013, John Wilden and I used diabetes to
exemplify how future innovations should
enable us to move from a remedial state of
medicine, where we manage the disease and
its complications, to the possibility of
curative medicine, where we treat before
symptoms are apparent. This is precisely the
information that we need to understand if we
are going to develop appropriate predictions
as to how future mortality will change.
Diabetes is a rapidly developing global
problem with huge implications for
healthcare costs. The number of people with
diabetes across China, India and the US alone
is expected to increase from 70 million to
150million between 2000 and 2030.
Type 1 diabetes is characterised by a lack of
insulin production and is an autoimmune
disease that is rst seen in children or young
adults. Treatment might be possible if this
immune response could be suppressed.
However, widespread suppression can lead to
www.theactuary.com
Daniel Ryan attributes the success
of underwritten annuities to the
integration of medical and
demographic knowledge within the
actuarial profession
Outsmarting
mortality
Medical research
Underwritten annuiiitie
p30-31_apr_longevitySEMIFINALCT.indd 30 22/03/2013 08:44
DANIEL RYAN is head
of life and health research
and development at
Swiss Re and a member
of the World Economic
Forum Global Agenda
Council on Ageing
GETTY
infection and other complications. A study [2]
that is expected to be completed in September
2014, is investigating whether the particular T
cells that are responsible for the immune
response in type 1 diabetes could be removed
using a stem cell educator. This targeted
modulation of the immune response could
have applications for other autoimmune
diseases, such as preventing the demyelination
of nerve bres that is seen in multiple sclerosis.
There are two types of cells in the pancreas
that are relevant to treating diabetes. The
beta-islet cells produce insulin that promotes
the uptake of glucose. With type 1 diabetes,
these islet cells are destroyed by the immune
system. The other type, the alpha-islet cell,
produces glucagon that promotes the release of
glucose from cells, and particularly from the
liver. Our modern eating patterns as compared
to those that shaped our evolutionary biology
mean that we eectively have an
oversu ciency of alpha islet cells.
Regenerative medicine
There is therefore an interesting possibility for
the replacement of beta-islet cells that have
been destroyed by the immune system. In a
mouse where all the beta-islet cells had been
destroyed [3], alpha-islet cells showed an
unexpected increase in replication and also
conversion to beta-islet cells. We now have an
increased understanding of the variety of
methods by which one adult cell can be
converted into another, and these could
include viruses and the eects of
inammation. The precise signals that lead to
conversion from alpha-islet to beta-islet cells
The above is by no means an exhaustive list
of diabetes research. I have not delved into
the world of nucleic or mitochondrial DNA
manipulation and expression. The key point
is that we should move away from aggregate
mortality improvements to those that focus
on developments that will apply to a group of
policyholders with a particular disease.
Such an approach will leave us with two
questions. First, to what extent will
policyholders embrace new recommendations
from doctors regarding healthy living and
treatment that moves away from the classical
pharmaceutical model? Second, what are the
drivers to improvements in mortality
experience in the healthy population?
I would suggest that the answers to all
these questions can only be resolved through
research collaboration within and outside the
insurance industry, and even then it will be a
long road. For those actuaries that join, be
prepared for a thrilling rollercoaster ride. a
REFERENCES
Full references for this article can be found online at
www.theactuary.com
are not known, nor whether these would have
an identical impact in humans. But this could
represent a valuable method for restoring
insulin production.
Another treatment possibility would be to
produce an articial pancreas that could
boost insulin production but was somehow
protected from the immune response. Viacyte
has developed a capsule that develops its own
blood supply after being implanted. This
creates a safe environment for cells to
dierentiate and produce an additional
source of beta-islet cells that will produce
insulin in response to changes in blood
glucose. This technology, Enceptra, will be
evaluated in a phase 1 trial in the near future.
So far, the strategies that we have focused
on to treat diabetes restore insulin
production. Many individuals with type 2
diabetes successfully manage their condition
through dietary control. Two separate
research streams from Harvard Medical
School have suggested that there may also be
ways to increase our metabolic rate and to
burn o excess calories [4] [5]. The rst
stream is concerned with the discovery that a
signicant proportion of adult humans do not
lose their brown fat, and that these cells are
activated by small drops in temperature and
use fat as a fuel to maintain body
temperature. The second stream builds on
the recent discovery of the hormone irisin,
which is produced by muscles in response to
exercise, and demonstrates the link between
bursts of activity in young athletes,
concentrations of irisin in the blood and the
production of ATP to fuel further activity.
www.theactuary.com
p30-31_apr_longevitySEMIFINALCT.indd 31 22/03/2013 08:44
4
2
8
0
1
1
4
0
22887
22887
228
3
2
5
5
3
TAPPING OPPORTUNITIES
IN ILLIQUID CREDIT
In todays low-growth, income-starved
world, the search for yield across
investment markets is likely to remain a
signicant driver of investor behaviour.
With nominal government bond yields
at such low levels, the additional pick-up
offered by the spread on credit is likely
to continue to attract investors. Credit
markets are likely to remain a signicant beneciary of this
hunt for yield, especially given the greater certainty of return
that they offer relative to equity markets.
However, we believe total returns from conventional corporate
bond markets over 2013 are unlikely to be as high as those
seen last year. Credit spreads were signicantly wider at the
end of 2011 than they are today (see Chart) so the scope for
further price increases is more limited. Investors looking to
maintain relatively high returns are faced with a choice. They
can reduce credit quality and increase the risk of default, or
explore more niche areas of credit markets where they can
expect to be paid for accepting lower levels of liquidity. In our
view, going down the route of accepting lower liquidity
currently offers a better balance of risk and reward.
Accessing illiquid credit opportunities requires specialist asset
management skills. Often these instruments do not have public
ratings. Managers have to make an in-depth credit assessment
themselves and understand their structure and documentation.
Two areas of illiquid credit we currently believe are worth
considering are secured corporate loans and commercial real
estate loans. The rst area is a well-established part of the
credit market and a good example of an asset where investors
are well rewarded for giving up some liquidity.
The absolute yields of secured corporate loans are now more
attractive than those from high yield corporate bonds. Loans
are also senior in the capital structure, which means investors
are given a higher priority claim on a borrowers assets than
a bondholder. Because of the secured nature of the asset
class, recoveries are generally higher in the event of a default.
Another interesting characteristic of loans is that they typically
pay a oating rate coupon that is reset in line with market
interest rates. This provides a natural interest rate hedge.
We also believe lending to commercial real estate projects is
particularly attractive on a risk/reward basis. It is an area of the
market that has opened to institutional investors partly as a
result of the nancial crisis. Many banks are being forced
by regulation to shore up their capital ratios and shrink
their balance sheets, including the size of their loan books.
Our research suggests 2013 offers a window of opportunity
to enter this part of the loan market on very attractive terms.
The value of investments and any income from them will
uctuate and is not guaranteed (this may be partly due to
exchange rate uctuations). Investors may not get back the
full amount invested.
For further information, please contact:
Institutional Business Development
businessdevelopment@insightinvestment.com
020 7321 1547
www.insightinvestment.com
CREDIT MARKETS PROVIDED INVESTORS WITH REMARKABLE PERFORMANCE LAST YEAR. ONLY 2003 AND
2009, YEARS MARKED BY ECONOMIC RECOVERY, DELIVERED STRONGER RETURNS. BUT WITH CREDIT MARKETS
TESTING THEIR HIGHS, NOW IS THE RIGHT TIME FOR INVESTORS TO CONSIDER WHAT THEMES SHOULD SHAPE
THEIR PORTFOLIOS IN THE YEAR AHEAD.
MARCH 2013
This document may not be used for the purposes of an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person
to whom it is unlawful to make such offer or solicitation. Issued by Insight Investment Management (Global) Limited. Registered in England and Wales. Registered ofce
160 Queen Victoria Street, London EC4V 4LA; registered number 00827982. Authorised and regulated by the Financial Services Authority. 09186-03-13
By Alex Veroude
Head of Credit,
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Chart : European corporate bond spreads over government bonds
Source: Bloomberg.
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ACT.04.13.032.indd 32 22/03/2013 08:57
Rating factors
On 21 December 2012, the Test-Achats ruling
came into eect meaning that pricing of
insurance products is now bound by the
Equality Act. It has long been understood
that male and female life expectancies dier
and this has been a major factor in pricing
annuities. Medically underwritten annuities
look at the whole person, their lifestyle and
medical conditions included, pricing each
client individually without relying on the
cross-mortality subsidy used in standard-rate
annuities. This would suggest that pricing
could be dierent if gender was an actual
marker in the progression of a disease.
To accommodate that, a change would be
required in traditional pricing structures,
where medical risk factors are added to
average life expectancy tables. The question
is whether this is really necessary. Current
statistics are pointing to the imminent
merging of male and female life expectancies,
probably as a result of recent cultural shifts,
such as the increase in smoking and drinking
among women.
It may be more productive to look at
potential new rating factors as there are
many. For example, although we may
consider medical advances to lead to
increases in life expectancy without
detriment, there are treatments that hold
their own risks. Methotrexate, a drug widely
prescribed for rheumatoid arthritis, is one.
We need to consider the combination of the
mortality risks, and this is di cult and
complex, especially as it would not be ethical
to withhold treatment from one group in
order to calculate the dierent death rates for
treated and untreated patients. First, though,
there is a denite opportunity to add rating
factors by medicines, as the data is easy to
obtain, being a question in each condition
area on the common quotation form.
Interestingly, it would appear that
treatments will also have dierent eects
depending on gender. Sometimes the risks
may present in the opposite direction to the
disease progression, and research into the
potential longevity risk calculation factors
allowable with gender-specic pricing
resulting is showing where this would
potentially be appropriate.
In fact, the rates oered for women should
be better than for men, as there are
conditions that progress more rapidly
towards death in women.
Another area that has been extensively
studied is the eect of poverty on mortality.
Dr Sheryl Gabram of Emory University School
of Medicine and Grady Memorial Hospital in
Atlanta, Georgia, conducted a study in 2008.
Using men and women from diering
socioeconomic groups with breast, prostate
JULES CHARRINGTON
is chief underwriter at
MGM Advantage
and colorectal cancers, she showed a
meaningful dierence in survival by status.
We already look at wealth as a factor in the
pricing of annuity rates, but low
socioeconomic status has many other factors
that could be used and the data is often
available to underwriters and actuaries.
Ideas being considered include the use of
the plethora of personal data related to our
everyday lives that is out there. Predictive
underwriting is already being debated by
protection product underwriters, and much
of this information could also be useful to
annuity underwriters. Potential factors
include gym membership, food shopping
trends and online computer gaming hours.
We need to keep reviewing the statistics
used, as society is no longer the stable,
unmoving thing it once was. People move
house and change job more often than ever
before, rendering the traditional postcode
and occupation factors as determinants for
socioeconomic status less and less relevant.
Recreational drug use is becoming more
widespread across all classes and may
overtake smoking as a relevant lifestyle risk
factor. Gathering information on this,
however, is going to be di cult.
Medical advances are continuing apace. No
longer are stem cell treatments and bionic
body parts the stu of science ction. It is an
unassailable fact that the world is changing
faster than the insurance industry. If we are to
maintain acceptable risks on our books, we
must adapt in order to survive. a
THE
GENDER
ANGLE
www.theactuary.com
Jules Charrington looks at the eect of the
Test-Achats gender ruling on rating factors
Table 1: Low socioeconomic status linked to five-year
all-cause mortality
Age-adjusted
mortality risk
Hazard
ratio
95% condence
interval
Breast cancer 1.59 1.35 1.87
Prostate cancer 1.33 1.13 1.57
60
65
70
75
80
85
90
Rising male life expectancy
Life expectancy at 30*
1950 60 70 80 90 2000 10 20 30
Source: Les Mayhew * England and Wales
Women
Men
Projected convergence in 2030
p33_apr_genderSEMIFINALCT.indd 33 22/03/2013 08:45
Todays underwritten annuity market is
highly competitive: each life is individually
underwritten, and up to 10 companies are
likely to be competing for each risk. As a
result, we have the paradox of a product that
is bespoke but is also now commoditised.
This means good-quality pricing and risk
management practices are essential and that
underwriters and actuaries must work very
closely together.
As the volume of sales has grown, so has
the volume of data. Although thats good
news, the number of deaths for holders of
these products is still relatively small and,
aswith all lines of actuarial work, the skill is
interpreting that data in the context of the
evolving marketplace.
The rapid growth in sales of underwritten
annuities, especially in recent years, is well
documented. From 2005 to 2010, UK sales of
underwritten annuities more than
quadrupled, and growth since then has been
around 30% per annum [1]. Although it is
unlikely to continue to grow at 30% per
annum indenitely, we believe it will
continue to grow and quickly in the
foreseeable future. This is because the whole
at-retirement marketplace will continue to
grow, and because market developments will
mean a larger proportion of retirees will apply
for an underwritten annuity product.
The markets rapid expansion has attracted
many insurers and reinsurers. Each will most
likely have dierent pricing and underwriting
structures, which will select against current
players that do not rene their rating
structures to the same degree of granularity.
We have seen this in the market already, with
many companies adopting an approach to
underwriting these annuities that is
reminiscent of how life insurance is rated:
relatively detailed mortality loadings,
customised for individual conditions and
severities. This approach in theory, at least
will attract more severely impaired lives
than the traditional approach in the market of
using a relatively small number of mortality
tables, each reecting a group of diseases
from which an annuitant might suer.
Granular rating
As you might expect, companies are also
seeking to oer enhancements to impairments
not currently covered, especially for applicants
with minor risk factors.
Taken in total, this suggests that to create
risk pools by condition, which are stable over
time and suitable for analysis, requires
considerable insight and adjustment to
successive cohorts of business.
A granular rating basis for this product will
consist of several hundred impairment codes.
Commonly, a life will have a number of
impairments, and so will also be assigned
multiple impairment codes. It would not be
unreasonable to expect well over a thousand
dierent combinations of impairments in a
live portfolio. Clearly, analysing such a varied
risk pool in detail has its challenges. Even
with a huge number of deaths, statistical
credibility will exist for only a small number
of the very common combinations of
impairments. As a result, the market will
always need to rely on interpretations of
medical studies and data by medics and
underwriters to provide rating information.
Relating the results of that work accurately to
the base mortality cost derived by actuaries is
a complex problem.
Unlike other life and health insurance
marketplaces, the underwritten annuity
market has had a standardised application
form for all participants for many years [2].
Itenables advisers to e ciently obtain
multiple illustrations and quotes from
providers, speeding product recommendation.
The quality of the standardised
applications approach has been much
improved by the recently implemented
ORIGO 3.7 project. This is the new data
exchange protocol for the pension annuity
marketplace. It has increased the number of
questions being asked, as well as the
underwriting details the questions elicit,
resulting in higher acceptance rates and a
better understanding of each individual risk.
That better comprehension of risk should
www.theactuary.com
The UK underwritten annuity market is growing
rapidly, challenging actuaries and underwriters to
constantly review their pricing decisions.
Peter Banthorpe discusses how the underlying
drivers will shape the markets future
Better comprehension of risk should allow
sharper pricing. However, how to adjust past
data for those changes is a key challenge
Steering through
the rapids
Pricing products
p34-35_apr_pricing_SEMIFINALCT.indd 34 22/03/2013 08:45
PETER BANTHORPE
is head of mortality
research at RGA UK
GETTY
allow sharper pricing than previously.
However, understanding how to adjust past
data for those changes is a key challenge.
One product or two?
We believe that underwritten and non-
underwritten annuities will increasingly be
seen not as two products but as one, just as
there is no such distinction in the life
assurance market. Every applicant will
undergo the same underwriting process and
receive the same product. The only dierence
will be the size of the mortality loading
applied to the price for a healthy life.
A single process to access the full range of
oerings is e cient for the consumer and the
insurer and will be encouraged by a number
of factors. For instance, the Association of
British Insurers code of conduct on
retirement choices, issued in March 2012,
encourages shopping around by customers at
retirement by ensuring that pre-retirees use
the open market option (OMO). And, more
recently, the Financial Services Authority
announced that it was undertaking a
thematic review [3] of the underwritten
annuity market to determine whether older
individuals were losing out by not shopping
around for the best annuity solution to their
retirement income needs.
These initiatives will lead to more retirees
being exposed to the underwritten annuity
market and will undoubtedly reveal more
impaired lives. Another factor is anticipated
growth in annuities being sold directly
through insurers websites, aggregators, or
direct sites sponsored by independent
nancial advisers. This will be a consequence
of the UK Retail Distribution Review (RDR),
which became eective on 1 January 2013, for
many annuity customers may choose to buy
directly rather than pay the explicit fee for
advice. With over 40% of pension funds being
less than 20,000 [4] at retirement, the cost of
advice will appear prohibitive in many cases.
One market element that might change is
the risk of over-disclosure by applicants.
Asthe benets of impairment-driven
enhancements to annuity payouts become
better known, potential buyers might
exaggerate ailments to obtain the highest
possible payouts. Most applicants are
remarkably honest when applying for
annuities, and insurers have good monitoring
processes in place. But this could change and,
if it does, it will have to be managed.
Future pricing improvements
Mortality trends are driven by a wide range of
factors. Thinking specically about
individual diseases, we can look at medical
improvements to prevent onset of the disease,
earlier detection, improvements in treatment
and also better post-treatment care.
Of course, those buying an underwritten
annuity have already developed a medical
problem, so primary prevention, detection
and initial treatment of that disease are no
longer going to benet our cohort of lives.
And since the lives are older, they will
frequently have multiple conditions.
Also, people with medical condition X
maylater also develop medical condition Y.
We need to look at mortality improvements
by medical condition, as drivers of mortality
improvement that have only a small impact
on a population as a whole may have a
signicant impact on specic conditions.
Forexample, consider a cure for a rare form of
cancer: over the whole population, the impact
on mortality is tiny, but for the cancer
patients the impact is signicant. When
analysing past data, we need to be aware of
factors that may have had a signicant eect.
The underwritten annuity market is a
sizeable and growing portion of the annuity
market. Accurate pricing of these products will
be critical to its long-term success, and requires
a blend of input from actuaries, underwriters
and medical practitioners. Analysing past data
can provide insights into the impact of disease
and the behaviour of consumers, but the ability
to interpret these insights in the context of the
evolving market is the key challenge for
actuaries in this eld. a
REFERENCES
[1] ABI market size statistics
[2] www.commonquotation.co.uk/
[3] www.bbc.co.uk/news/business-21273593
[4] ABI market statistics
www.theactuary.com
p34-35_apr_pricing_SEMIFINALCT.indd 35 22/03/2013 08:45
www.rgare.com
The security of experience. The power of innovation.
Its not about us.
lt's about always putting our clients and their customers hrst.
RGA celebrates 40 years of using underwriting and mortality pricing excellence
as the foundation to build commercially focused, innovate products and services.
From idea to product to success, we are with you every step of the way.
ACT.04.13.036_37.indd 36 22/03/2013 08:58
How long has RGA been involved in the
underwritten annuity market?
We made the strategic decision to enter the market
in summer 2006. We spent the next year working
on essentially two parallel projects: one researching
mortality and underwriting, the other building a
consumer-friendly sales and application process. Our
hrst client went live during the summer ol 200?.
Why did RGA enter this market?
The product had been in existence for more than 10
years, but we could see potential lor growth. Dehned
beneht plans had been contracting and dehned
contribution plans expanding. There were more people
coming to retirement and Treating Customers Fairly
(TCF) considerations, meaning more people should be
offered the underwritten route.
In addition, the product plays directly to RGAs strengths,
in terms of mortality and underwriting research, using
technology to improve the customer journey, and
developing processes that work lor our clients and
their customers. We could also see value in hedging
the in-force term life and critical illness portfolios.
Have you been successful to date?
Yes, and we expect this to continue into the future.
What has driven this success?
ln a nutshell, we provide the services our clients need to
successfully grow their underwritten annuity business.
These services directly complement the clients' skills. lt
sounds a bit glib, but this is a product line where there is
genuine synergy between insurer and reinsurer.
To be more specihc, our underwriting manual contains
detailed medical information and customised calculators,
and our AURA e-underwriting solution enables a
high percentage of applications to be automatically
underwritten. In addition, our knowledge of this product
and the market-place allows us to provide clients with
expert advice on a broad range ol related issues, lrom
pricing and underwriting to selling, the applications,
disclosure-checking, and capital management. Finally, we
take a portion ol the risk with typically a more aggressive
view than insurers, which allows them to ultimately write
more business, or increase their prohtability.
:KDWULVNVPLJKWGDPDJHWKHSURWDELOLW\RI
the portfolio?
lgnoring investment risk, which is clearly material, within
the mortality element there are three key factors: base
mortality, underwriting loadings, and future mortality
improvements. With thorough, detailed research,
mortality and underwriting can be assessed accurately.
The big unknown is luture improvements in longevity.
These risks can be mitigated by the use of reinsurance
and by hedging across other mortality lines.
Where do you see the market going from here?
The market has been growing at approximately 30%
per annum, and while this rate will inevitably slow in the
long term, we foresee continued growth in the short
term. Drivers ol this growth include baby boomers who
are now moving quickly into retirement, the Association
of British Insurers (ABI) and other regulatory codes
pushing open-market options, and the continued growth
in dehned contribution schemes. The challenge lor us,
as insurers and reinsurers, is the large number of small
pension pots. While it is absolutely right to encourage
customers to shop around, it is also dilhcult when the
amount ol money is small. l believe very strongly that
insurers and reinsurers should be designing processes
to make life as easy as possible for customers and
advisers. l also believe that the technology is there to
allow this without increased risk to the insurers.
The product is a genuine win-win-win for customers,
advisers and insurers. Long may this continue!
Jason Hurley FIA
Head of Sales and Marketing
RGA UK and Ireland
RGA Supports Underwritten Annuities
We provide the services our
clients need to successfully
grow their underwritten
annuity business.
Advertisement Feature
ACT.04.13.036_37.indd 37 22/03/2013 08:59
To kick o with a simple
question, what exactly does a
personal underwritten annuity mean?
CB: This is literally as simple as it sounds; we scrutinise each
persons lifestyle and medical history and oer those individuals with
reduced life expectancy better annuity terms. At Aviva, we believe that
all annuities should be fully underwritten to ensure that customers
receive the correct level of benets in retirement.
Looking at the growth in sales, are enhanced
underwritten annuities becoming the standard?
TG: A personal underwritten annuity means taking into account
factors such as health and lifestyle to determine life expectancy and
we believe that, at some point, disclosing this information will become
the norm. However, the fact you can be better o through being in
poor health is a di cult concept for consumers to understand.
Customers need and deserve a conversation to explain the benets.
VO: In the UK, according to the ABIs quarterly statistics Q3 2012, 80%
of retirees annuitise and, in the 12 months to September 2012, over
30% of the funds annuitised were underwritten.
TG: Last year, of the 200,000 annuity contacts sold externally, where
consumers shop around and buy their annuity from another provider,
around 46% were enhanced annuities. On the other hand, of the
220,000 contacts sold internally, where customers buy their annuity
straight from their pension provider, less than 5% were enhanced
annuities. Estimates are that 50% to 60% of consumers could qualify
for an enhanced rate and so there are still a lot of people potentially
missing out on extra income.
Why is take-up in the internal market slower?
TG: Externally, many consumers get nancial advice and it seems that
checking for qualication for an enhanced rate is fast becoming part
of many advisers routine process. As well as severe illnesses,
enhanced annuities now cover lifestyle-type health risks, including
blood pressure, cholesterol and body mass, which means qualication
for extra income is much wider than it used to be. Many nancial
advisers therefore ask all their customers to complete a lifestyle/
medical questionnaire just to be sure they dont miss out. Poor market
conditions and falling annuity rates have also focused minds on
squeezing out as much retirement income as
possible, making enhanced annuities worth
consideration. When it comes to internal sales,
some companies simply dont oer an enhanced annuity
product to their maturing pension customers. Also, low awareness of
annuity options, smaller pot sizes and a lack of advice makes it easy
for many in this group to end up with a poor outcome, including
missing out on enhanced terms.
How can we encourage consumers to shop around?
TG: From 1 March, the new ABI code of conduct on retirement choices
will bring about consistency in the communications that pensions
companies have with their customers in the run-up to retirement.
Theobjective is to get consumers to make more informed choices
about their retirement income and that includes the decision to
shoparound.
CB: The adoption of common quote forms and the recommendations
made in the ABI code of conduct on retirement choices are already
helping. In addition, although the internet is undoubtedly a useful
resource, we believe that all retirees should make sure they have a
face-to-face conversation about their retirement needs.
VO: Online aggregators are driving awareness, with research tools such
as online calculators providing the opportunity for annuitants to shop
around and compare incomes instantly. Inertia is also a challenge its
still easier to accept an oer from an existing provider than to shop
around for what may seem a modest dierence to many with smaller
pots. This has led to calls for all annuities to be underwritten.
Could customers lose out by shopping around?
CB: Providing additional information around personal health and
lifestyle choices doesnt ever decrease a standard annuity rate if the
conditions are very mild, they may have no eect on the rate; however,
if more severe, they can and do increase annuity rates.
What role should nancial advisers play?
SL: New rules on nancial advice that came into force this year put
more pressure on intermediaries to justify their costs, and taking a
more detailed interest in clients who may be about to commit many
tens of thousands of pounds is one way of doing this.
SHUTTERSTOCK
www.theactuary.com
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Welcome to The Actuary
magazines rst
underwritten annuities
forum with leading industry
providers, facilitated by
Sarah Bennett
p38-39_apr_Forum_FINALnewCT.indd 38 22/03/2013 10:23
TIMOTHY GOSDEN (TG),
head of annuity product
development and marketing, L&G
STEPHEN LOWE (SL), group
external aairs and customer
insight director, Just Retirement
ANDREW TULLY (AT),
pensions technical director,
MGM Advantage
CLIVE BOLTON (CB),
managing director of Avivas
At Retirement business
VANESSA OWEN (VO),
head of annuities and
equity release, LV=
CB: Financial advisers play a key role in getting the right annuity for
customers. This may increase the cost of service for advisers, but we
believe that they need to be able to charge an appropriate amount for
the service and anticipate that the cost will reect this.
VO: Independent nancial advisers (IFAs) are best placed to guide the
customer through the decision process. But, for most IFAs, it may only
be nancially viable to oer advice on larger pots, where the choice
isnt whether to select an underwritten annuity but whether to buy an
annuity at all. The success of aggregators oering non-advised
comparison services was well established pre-Retail Distribution
Review (RDR) and is expected to continue. This may mean, post-RDR,
we could see a steady shift of consumers choosing non-advised routes.
Is portalisation a good or bad thing?
AT: Portalisation is a bit of a double-edged sword. It will open up
underwritten annuities to a wider audience as portals move towards
direct-to-client oers, and annuity providers move their propositions
onto various consumer comparison websites. However, automating
quotes will always restrict the underwriting philosophies to the same
data set. There are moves to develop more sophisticated messaging to
ag condition areas and/or combinations of risk that would be better
reviewed by a human underwriter, but these involve quite signicant
system development and industry will. Underwriters would welcome
these referrals, especially as the most accurate disclosures come from
the clients rather than from their advisers.
TG: Portalisation is a good thing as it facilitates a speedy and e cient
service for intermediaries and enables consumers to complete an
online medical form if they want. The person best placed to complete
the medical form is the consumer or a medical professional on their
behalf, and so all portals should facilitate this and ensure the question
set is comparable with the industry common quote request. For more
complex medical conditions, a paper form is probably the best option.
How will distribution of underwritten annuities
evolve in future?
VO: The evolution of online non-advised channels has been rapid.
Now we are seeing increasing discounting between non-advised
services as competition increases. Of equal importance, we see
workplace distribution as critical to overcoming inertia at the point of
retirement. This is where, over the long term, we see the value from
auto-enrolment driving up the size of retirees pension pots, thereby
increasing the potential for market growth.
Will we see a trend towards streamlined or
detailed underwriting going forward?
SL: About six years ago, key players in the industry worked together to
replace medical questionnaires with the more detailed industry-
standard common quotation form. Eectively, shallow underwriting
was considered obsolete and all of us who knew its limitations were
keen to replace it with something better. Its re-emergence is on the
basis that streamlining the process by basing decisions on a few broad
factors rather than many detailed ones could cut costs. But thats not
great for customers, who may miss out on income.
Will additional layers of underwriting further
complicate the purchase of an annuity?
CB: We dont believe that asking customers to provide a full set of
information, which could increase their income in retirement but
never decrease it, can be bad for customers in any way.
What is wrong with the existing system?
CB: The existing system can be confusing. All customers deserve a
conversation about their retirement needs, regardless of the size of their
pension pot. Such conversations can lead to retirees considering options
they would not have thought about. For example, some may assume an
enhanced annuity from one provider will always pay a higher income
than a standard annuity from another. This isnt always the case. Some
competitive standard annuities may oer a higher rate than an
enhanced personally underwritten quote from a less competitive
provider. But some enhanced annuities may include a narrower range
of underwriting factors than another standard annuity, which may be
priced to include factors such as postcode or smoking.
What would be your idea of Utopia in this market?
TG: For everyone to understand the benets of enhanced annuities
and to be willing to complete a lifestyle/medical questionnaire. Also
for companies to be forced to oer an enhanced annuity to internal
customers, either themselves or through another provider.
What does the future hold?
SL: Technology is allowing us to gather more information, more
cheaply than ever before and to understand what those numbers
mean in ner and ner detail. That will dene the marketplace as
insurers ght to create the intellectual property that gives them a
sustainable competitive advantage. a
www.theactuary.com
Industry forum
p38-39_apr_Forum_FINALnewCT.indd 39 22/03/2013 10:23
www.theactuary.com
At the back
Arts
Arts
arts@theactuary.com
Sharon Maguire explores the life
and work of one of Britains greatest
20th-century thinkers
Aside from the lm Enigma (2001) and the
Robert Harris book of the same name, Id paid
scant attention to codebreakers and Bletchley
Park. Even though both book and
aforementioned lm are highly ctionalised
accounts of a young mathematician trying to
break the Germans Enigma ciphers during the
second world war, there is little reference to a
man called Alan Turing.
Ironically, his story is one that is equally
compelling, mysterious and, above all, sad.
With that in mind, I set o for the Science
Museum in London to see Codebreaker: Alan
Turings Life and Legacy a special exhibition
to mark the centenary of his birth.
Alan Mathison Turing was born in London
on 23 June 1912. His formative years were spent
in Dorset at Sherborne School, where he
became friends with fellow pupil Christopher
Morcom the rst in a line of male companions
that Turing would become involved with. Their
friendship would inspire Turings lifelong
endeavours. However, it was cut short by
Morcoms sudden death in February 1930, aged
18, from tuberculosis.
Turing went on to win an open scholarship in
mathematics to Kings College, Cambridge,
matriculating in 1931. He graduated in 1934
with distinction, and was awarded a fellowship
in 1935. In 1936, Turing went to Princeton
University in the United States, before
returning to Kings in 1938.
At school, Turing was described as being
popular with the boys, but never quite one of
them. He was considered an eccentric
character, a very reserved sort, although he
generally got on well with everybody.
Cryptology comes of age
When war broke out, he joined the Government
Code and Cypher School at Bletchley Park.
Along with another Cambridge mathematician,
Gordon Welchman, he designed a new
machine, the Bombe; used to decipher
Enigma-enciphered messages. It was the work
done by Turing and his colleagues during this
time that brought cryptology into the modern
world. In 1946, he was awarded an OBE for his
work there.
Set amid the spectacle of astronauts, rockets,
and all things scientic, analytic and
mechanically artistic, the exhibition is
unassuming. A haunting, melancholy face at
A L A N T U R I N G :
B E YO N D T H E
E N I G MA
p40_41_apr_arts_SEMIFINALCT.indd 40 22/03/2013 08:46
www.theactuary.com
During an intense
period of grieving,
Turing began to
contemplate a
spiritual existence
beyond the body,
and he turned his
attention to whether
machines could learn
to think like humans
the bottom of the staircase beckons you
upstairs to a large balcony set aside for this
pioneering British gure.
Despite being best-known as a genius
mathematician and codebreaker, the exhibition
covers many other facets of Turings life. The
area is arranged into six themes: Computing
before computers; Turings war, and his work at
Bletchley Park; Pilot ACE the automatic
computing engine; Can machines think?;
Amatter of life and death; and Programming
computers today.
According to David Rooney, curator of the
exhibition, the star of the show is the Pilot ACE
computer, which, in its day, was the worlds
fastest computer. It is the most signicant
Turing artefact in existence and Rooney says it
wouldnt be too fanciful to suggest that Pilot
ACE was Alan Turings mind made into metal
and glass valves.
Showcased alongside this is a moving set of
archives made available by the family of
Christopher Morcom. During their time at
Sherborne, it was clear that Turing was besotted
with Morcom, and the intensity of the
relationship was such that Turing would
eulogise his feelings of love and loss in a series
of heartfelt letters sent to Morcoms mother in
1930, following her sons untimely death. It
seemed their great bond stemmed from the fact
that Morcom was someone who took scientic
ideas seriously he may well also have been the
rst person to take Turing seriously.
During this intense period of grieving, Turing
began to contemplate a spiritual existence
beyond the body, and he turned his attention to
whether machines could learn to think like
humans. This idea would stay with him for the
rest of his life.
On show at the exhibition is a charming short
lm, charting the creation by Turings
contemporary, Dr William Grey Walter, of Toby,
a mechanical tortoise with an electronic brain
that functions like the human mind. His
magic-eye head is a photo-electric cell that
revolves to nd the strongest source of light, to
which it is then drawn, negotiating obstacles
along the way. Turing knew Grey Walter well,
and would later visit the Science Museum to see
a demonstration of a pair of Grey Walters
tortoises that reportedly captivated him.
In 1948, Turing began working on a ground-
breaking new project, developing mathematical
theories of morphogenesis the development
of form and structure in an organism. But only
four years later, following a relationship with a
local man, Turing was arrested under anti-
homosexuality legislation and convicted of
gross indecency. Doctors then were
experimenting with ways to treat
homosexuality, and Turing was given the
option of either imprisonment or chemical
castration. He opted for the latter.
During this time, he had continued with his
research on morphogenesis, as well as advising
the government on secret codebreaking
projects. However, his security clearance was
suddenly revoked and he was put under
surveillance. In 1954, aged just 41, he was found
dead as a result of cyanide poisoning. The
o cial verdict was suicide, with the coroner
adding his mind had become unbalanced.
Alan Turing is most widely known for his
critical work at Bletchley Park during the
Second World War. But he was also a
philosopher and computing pioneer who
questioned and contemplated the fundamental
problems of life itself.
His ideas have touched so many aspects of
science and technology, including the early
days of computer programming, and planted
the seeds of articial intelligence. A great many
things we use in our daily life exist as a result of
such pioneering work.
It is perhaps ironic then that the Science
Museum, with all its celebration of the
advances of human endeavour, and its gizmos
and gadgets laid out for purchase in the
museum shop, owes much to the quiet,
unassuming man whose mournful image gazes
down from a quiet corner of the balcony.
In a letter to the Telegraph, Stephen Hawking and other
scientic luminaries have called on prime minister
David Cameron to formally pardon Alan Turing.
Despite a posthumous apology in 2009 by then
prime minister Gordon Brown, no o cial pardon was
given. A later appeal was turned down by the coalition
government. With a private members bill drafting new
legislation later this year, it may well be that one of the
most brilliant mathematicians of the modern era can
at last be celebrated without reserve.
Codebreaker Alan Turings life and legacy
runs until Sunday 30 June at the Science Museum,
Exhibition Road, London SW7 2DD. Admission is free.
Unrivalled: Pilot
ACE was, in its
day, the worlds
fastest computer
Early articial
intelligence: the light in
Toby the Tortoises hutch
never fails to bring
him home
GETTY / SCIENCE & SOCIETY PICTURE LIBRARY
zes
er
as
oon nn
eew w
he he
an
y
ee.
Early articial
intelligence: the light in
Toby the Tortoises hutch
never fails to bring
him home
p40_41_apr_arts_SEMIFINALCT.indd 41 22/03/2013 11:27
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GETTY
Managing Fraud Risk A Practical Guide For
Directors And Managers by Steve Giles
PUBLISHER John Wiley & Sons
ISBN-10: 0470979453
RRP 34.99
BOOK REVIEW
There are two important things you would not guess
from the title of this book. First, it is a very good read: not
quite The Girl With The Dragon Tattoo, but it ows well
and keeps the reader involved. Second, while its core
subject is fraud risk, it could easily be used as a more
general introduction to risk management. Perhaps
because fraud itself can produce some fascinating
stories, and certainly because the author is able to draw
on examples from a career built on consultancy and
teaching, this book provides a very practical
perspective on its subject matter.
The book comprises 10 chapters, each covering a
discrete aspect of fraud from softer elements, such as
behaviour and responsibility, to elements of a risk
management framework: controls, prevention and
detection. The 10 chapters are linked without too much
contrivance to 10 questions in a fraud awareness quiz
that the author uses when teaching. Actively stopping to
consider each question before reading the content of
the associated chapter prepares the reader to
challenge their own views. It also helps to embed the ve
key messages at the end of the chapter.
The book does deliver some very useful textbook
content. There is factual content largely built around
introductions to relevant frameworks that have
developed over the years: legislation such as
Sarbanes-Oxley and anti-bribery laws, risk
management frameworks such as the Committee of
Sponsoring Organizations (COSO) ERM model, control
frameworks and corporate governance approaches.
The treatment of these frameworks in the book is
supercial enough to bring out the essence of their
purpose, but leaving the reader to investigate further by
following references. This content is complemented by
the authors personal insights as a practitioner, so the
whole book suggests a theoretical framework that
underpins the practical advice it contains.
The author uses two further teaching aids. The rst
involves case studies drawn either from personal
experience (the author was a key player in the team
investigating the Polly Peck collapse) or from the study
of other highly public cases. The second quotes insights
drawn from a select group of other practitioners whose
approach to fraud risk management has quite clearly
impressed the author. Rather than using these
illustrations to reinforce his own position, the author
appears to want to give the reader a broader palette
of viewpoints.
Considering this books usefulness to actuaries,
I would point to three things.
First, this is as good a risk management primer as
any other text. As more actuaries like to consider
themselves risk management professionals and as the
demand for these skills increases, students and
experienced actuaries alike would benet from
reading it.
Second, for actuaries who are directors or senior
managers of organisations, the book is a useful
reminder of the threat of fraud risk, directors and
o cers accountability for protecting stakeholders from
fraud and the resources available to them to discharge
that accountability.
Lastly although it is only a small section the
discussion of statistical techniques used in the
detection of fraud will be familiar territory for actuaries
whose core role involves the analysis of large volumes
of data.
A nal thought, inspired by the subject matter, relates
to the role that actuaries should continue to play in
comparing long-term benets with short-term costs.
Fraud prevention is only one example of the conict
between businesses increasing exposure to risk and
the pressure to reduce the cost of controls, taking
resilience out of individual businesses and therefore the
economy and society.
While practitioners such as Steve Giles continue to
improve the eectiveness and e ciency of controls,
actuaries do have a role to play in highlighting the
nancial benets of maintaining those controls.
Tony Brooke-Taylor is an audit director, general
insurance, at Aviva
As more actuaries consider themselves risk
management professionals and as demand
for these skills increases, both students and
qualied actuaries will benet from reading it
MORE ONLINE
Latest reviews at
www.theactuary.com/
opinion
p42_apr_reviewsSEMIFINALCT.indd 42 22/03/2013 08:47
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At the back
Coee break
HAVE YOU GOT WHAT IT TAKES?
Membership of Mensa is open to anyone who can
demonstrate an IQ in the top 2% of the population.
For information on IQ testing in your area, visit
www.mensa.org.uk or call 01902 772771, option 1 puzzles@theactuary.com
Mighty mileometer
Mensa puzzle 540
Swallow the dictionary
Mensa puzzle 541
Cash in hand
Mensa puzzle 542
Indianapolis 66
Dallas 42
Philadelphia 75
Miami ?
Spadework Bridge puzzle 31
How many miles
should it be to
Miami on this
strange signpost?
Move from square to touching square to nd
the longest possible word.
What is it?
T I N
C O A O
R R S N
P A T I
Justiably unwilling to defend, you punt 4 hearts.
West could bid 4 spades but fancies his chances of
beating 4 hearts.
West leads K. You ru with 7 and draw 2 rounds of
trumps, both defenders following.
Plan the play. Whenever the defence wins a trick,
they will continue to play spades.
Bridge puzzle provided by David Lampert
A bank cashier transposed the pounds for
pence and vice versa on a cheque, giving the
customer far too much money. After the
customer had spent 6.23 he still had exactly
three times the amount of the original cheque.
What was the amount of the
original cheque?
SHUTTERSTOCK
6534
10
432
AK1096
KQJ1098 A72
Q653 42
A 8765
J7 Q832

-
AKJ987
KQJ109
54
N
W E
S
Bidding: Game All
W N E S
1 P 2 4
P P P
Pick up the pace
Mensa puzzle 539
A cyclist is on a ve-day expedition. On the rst
day, she covers a quarter of the total distance.
The next day she covers a third of what is left.
The following day she covers a quarter of the
remainder and, on the fourth day, half of the
remaining distance. The cyclist now has 16 miles
left. How many miles has she travelled?
For a chance to win a 50 Amazon voucher, please email
your solution to puzzle 539 to: puzzles@theactuary.com
by Tuesday 16 April
TERMS AND CONDITIONS The prize will be awarded
for the rst correct entry drawn at random from those
received before the closing date. The winners name will
be announced in the next edition. Please note, the puzzle
editors decision is nal and no correspondence will be
entered into. We reserve the right to feature the winners
name in The Actuary. Your details will not be passed to any
third party in connection with this draw.
Puzzles
B
U
M
PER
PR
IZE
PU
ZZLE
p43_44_apr_puzzlesFINALnewCT.indd 43 22/03/2013 10:24

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44
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At the back
Coee break
puzzles@theactuary.com
SOLUTI ONS FOR
F EBRUARY 201 3
A factory recycles cups
for use in its canteen.
Eight used cups are
required to make each
new cup.
If there are 351 used
cups, how many cups
can possibly be made?
ANSWER: 50. Carry on
using and recycling the
cups until you cannot
make any more
Recycling factory
Mensa puzzle 535
Employer and area of work Redington.
How would your best friend describe you?
Quick-witted, intelligent and imaginative. But
nothing so generous if I were in the same room!
What motivates you? Pride. Everything I
output is in some sense an ambassador for
me. I want everything of mine to be the best.
What would be your personal motto? Whenever
you do anything you value, imagine it going
wrong, and someone asking you why you
didnt prevent it.
Name five guests you would invite to a dinner
party? Jesus Christ, to know how much of
what is attributed to him was his own;
Leonardo Da Vinci, as someone with an
incredible imagination; Alexander the Great,
to see what motivates and enables someone
to do what he did; Oscar Wilde and William
Shakespeare, for sheer linguistic ability.
Whats your most actuarial habit? Use of the
subjunctive mood.
Favourite Excel function? If.
How do you relax away from the office? Fujian
White Crane Kung Fu. I also teach a weekly
beginners class.
Alternative career choice? Mathematician.
Tell us something unusual about yourself Im an
atheist, despite inviting Jesus to dinner.
What are your top three things to achieve in your
lifetime? To marry and have children; run my
own business; leave a mark on my industry.
If you ruled the world, what would you change? Id
make the Armenian Genocide o cially
recognised everywhere. Its important to
separate facts from politics, and any serious
attempt to prevent genocide in the future
must start with a study of where it has
happened before, and how it comes about.
That can only happen if facts are available.
ACTUARY OF
THE FUTURE
ALEX WHI TE
Do you know an actuary
destined for greatness?
You can nominate an Actuary of the Future
by emailing
aotf@theactuary.com
You are South N S
and the bidding 1 2
has gone: 2NT 3
Multiple Choice Bridge puzzle 30
1 2 3 4 5
AQ8 10986 AJ8 42 J86
KJ74 64 K97 K10752 K64
J652 AQ865 10942 A6542 109865
64 J4 K73 3 Q2
Which of Souths hands above best ts Souths bidding, and what would your rst bid be with
the other four hands?
ANSWER:
1 Not this. You would support hearts straight away. Bid 3.
2 Not this. You are not strong enough to bid at the 2-level. Bid 1.
3 This one. Much better to respond with a suit bid than making the poor bid of 2NT. If you bid 2NT and Partner
has 5 hearts, you will miss a 5-3 t and the NT contract is played from the wrong hand.
4 Not this. With a weak distributional hand, 7-losers and 5 trumps, bid 4.
5 Not this. You could bid 1NT but 2 is better, even with only 3 hearts. You may be able to ru a club, it takes
more bidding space away from the opposition and it enables Partner to compete more easily in hearts. Bid 2.
Shakespearean shake-up
Mensa puzzle 536
Rearrange the letters of
HER MATE
WON THE
FIGHTS
to give the title of a
Shakespearean comedy.
What is it?
ANSWER: The Taming
of the Shrew
Pick a number
Mensa puzzle 537
What number should
replace the question
mark in the grid?
ANSWER: Three.
On each row multiply
the two outer
numbers to get the
centre two.
3 2 7 9
8 4 8 6
5 3 5 7
9 ? 6 4
Mind over matter
Mensa puzzle 538
What should be the value of the fourth column?
ANSWER: 335. Green is worth 70, jade is
worth 85 and navy is worth 90.
355 315 330 ?
SHUTTERSTOCK
Congratulations to this months winner
Christopher Vanston-Rumney
of Lloyds Banking Group
p43_44_apr_puzzlesSEMIFINALCT.indd 44 22/03/2013 08:48
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At the back
Student
Student
student@theactuary.com
I LLUSTRATI ON: PHI L WRI GGLESWORTH
THE END I S NI GH
Jessica Elkin prepares for the end
of the world well, of her actuary
exams, anyway
Its nearly here. Doomsday.Armageddon.
Ragnark.The examination period.
Back in November, I wrote about
developing good study habits.So, presumably,
by now you are completelyau faitwith the
material and have a healthy bundle of past
exam papers under your belt.You eat
nutritious meals and go to bed early.
But if youre not, take a chill pill, because
these handy revision tips will help you to
excel. Rest assured that they are practised
expertly by yours truly.
Make a thorough study timetable.Detail
every days study in painstaking detail.Spend
plenty of extra time making it look pretty
this will help you to follow it.
Keep plenty of drinks on hand.If you nish
one quickly its probably because youre
dehydrated and need another.
Have lots of breaks. Get another
drink and maybe a snack while youre
at it. Maybe see whats on TV.Now
that youve started watching something,
you should see it through to the end, else
youll be too distracted by the lack of
closure to concentrate.
When you sit down to study, make sure
you lay everything out neatly otherwise
your mind will be as disordered as your
desk.This includes putting tutorial
notes in order and ling old bank
statements.
Is that your phone ringing?No, you
imagined it.Maybe just double check.
Open up to the start of a
chapter.Read, understand.Start to
make notes.This is studying! Youre so
pleased with yourself.
Probably time for a break.
If that doesnt work for you ...
All right, Im just as bad at them. The reality is,
the most eective way to study is just to do
it.Yes, make a schedule, and do have plenty of
breaks.But follow the schedule, and dont relax
the break time.Turn o your internet so as to
avoid Youtube.Get one of your scariest friends
to loom over you judgmentally every so
often.But dont be hard on yourself.Everyone
messes up the secret is to learn that staying
up watching, say, Dexter leads not to joy but to
shame and regret.
There is a document, found on the
professions website, that details how the exam
process works, from writing the papers to
marking the exams to announcing successful
candidates.It all makes quite a lot of sense,
and also reveals that the pass mark is decided
in advance and then adjusted depending on
how everyone performs.Someone once said
to me that you dont need to beat the exam, so
long as you beat ~60% of the other takers.
So, on a completely unrelated topic, how
about a riddle before you get down to
revision? Just to warm up your brain. You can
study later.
Its all in the eyes
There are 100 people with blue eyes and 100
people with brown eyes who live on an island
together. They are all perfectly logical and
superbly intelligent people, but none of them
is very happy because the island is boring and
they all want to study to be actuaries on the
mainland. No one knows the colour of his or
her own eyes or what the numbers of people
with each eye colour are. Every night at
midnight, a boat stops at the island. Any
islanders who have deduced the colour of
their own eyes get on the boat and leave the
island. Everyone can see everyone else at all
times, but they cannot otherwise
communicate. Everyone on the island knows
and follows all the rules.
The boat also brings along a wise old lady
who, incidentally, has green eyes.Lets call
her the captain of the boat.She comes and
looks over the island every night at midnight,
and pities all these aspiring actuaries,
but goes away with the boat
eachnight.
It turns out that the wise old lady
can speak, and she says just one thing.
From the edge of the island, just as the
boat is leaving, she says the following:
I can see someone who has blue
eyes. Who leaves the island,
andwhen?
This isnt a trick question, though it
is tricky, and it does have an
answer.Its not one of those lame
riddles, where the answer is no one
leaves or the captain leaves or
anything like that.
Its a matter of logic. If youre
systematic in your approach,
youll nd it easier to get the
answer.A little like revision, perhaps.
But you can think about that later. a
p45_apr_students_SEMIFINALCT.indd 45 22/03/2013 08:48
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ERM Actuary Up to 115k Basic, Bermuda
This global P+C insurer is looking to expand their ERM team in Bermuda
with the appointment of two Actuarial professionals in to their Insurance
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Insurance Risk and will perform Capital validation and Enterprise Risk
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James@highfinancegroup.co.uk
Actuarial Consultant 45k - 65k Basic, London
A rare opportunity for a student General Insurance Actuary to join this
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Senior Pricing Analyst 40k - 55k Basic, London
This leading UK General Insurer is currently looking to add a talented and
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Supporting the Pricing Manager, you will work closely with the Underwrit-
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Reserving Actuary Up to 80k Basic, London
A Lloyds of London Managing Agent is looking to build its actuarial team
from grass roots level. The role will assist the Chief Actuary in bringing
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following years. The ideal candidate will come from the London market
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Head of Reserving 100k - 130k + Basic, London
This Lloyds Syndicate is looking for a qualified Reserving Actuary to
report to the board whilst running and growing the reserving function.
The role will have responsibility for the technical reserving processes
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Deputy Chief Actuary 100k - 150k Basic, London
Newly established Lloyds syndicate seeks a qualified Actuary to work as
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Head of Pricing Lloyds Syndicate
Pricing Actuary US commercial Insurer
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Reporting Actuarial Analyst Niche Life Insurer
Moses Modeller Life Insurer
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Life Actuary 55k - 80k Basic, London
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Prophet SME 50k - 80k Basic, South
A Large UK life insurer is keen to recruit a Prophet Modeller to
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Pricing Contractor 700 - 1000 a day, London
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A truly fantastic opportunity working with a bespoke Management
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Moses Modeller 600 - 850 a day, London
A niche Insurer is looking for a strong MoSes modeller to help modify
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A unique team is seeking a consultative and market facing
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Asset, Liability & Risk Actuary Up to 75k Basic, London
Take your career forwards with a truly innovative firm, providing
clients with cutting edge solutions to analyse their Pension scheme
liabilities, assets and risk. The role will include technical modelling,
client liaison at a senior level project management. Utilising your
detailed knowledge of DB Pension valuations, this is an excellent
chance to diversify your skillset gaining direct exposure to
investments and risk. Miranda@highfinancegroup.co.uk
Life Insurance Roles
Contract Roles
Reserving Contractor 750 - 1000 a day, London
Leading Lloyds syndicate is looking for a qualified Actuary for 3 - 6
months to work closely with the Head of Reserving. The right person
should have the ability to role up their sleeves and get involved in the
technical work from day one. Start within a month.
William@highfinancegroup.co.uk
Pensions & Investments Roles
ACT.04.13.047.indd 47 22/03/2013 09:07
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ACT.04.13.048.indd 48 22/03/2013 09:08
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www.theactuary.com
London : Chicago : Hong Kong : Singapore : Shanghai
Senior Actuarial Analyst - London
Competitive Package
This multinational insurance & reinsurance company is looking to
enhance their team with a Senior Actuarial Pricing Analyst. The main
remit is to provide actuarial pricing support for underwriters across
all lines of business, e.g. d&o, e&o, medical malpractice, general
casualty, large account property. Strong VBA and SAS skills are
required. Relevant experience, especially in commercial property and
casualty insurance or reinsurance is expected. The ideal candidate is
FCAS or equivalent.
Contact phu.ngoc@ipsgroup.co.uk
+44 207 481 8686
Actuarial Controller - London
Competitive Package
This multinational insurance company is looking to enhance their
team with the addition of an Actuarial Controller. The role reports
directly into the Head of Reserving. Principal tasks will revolve
around the quarterly reserving process. The person will be responsible
for the delivery of actuarial output to the stakeholders (e.g. senior
management, other departments, Lloyds).
The ideal candidate will have signifcant experience in managing
fnancial processes. Good knowledge oI GI Reserving would be
advantageous. This role offers high visibility and requires very good
communication skills.
Contact phu.ngoc@ipsgroup.co.uk
+44 207 481 8686
Senior Investment Advisory - London
Top Quartile Salary, Bonus and Package
A global consulting organisation is looking to expand its strategic
investment advisory unit which advises a range of institutional investors
including defned beneft and defned contribution pension Iunds, charities
and endowment Iunds and sovereign wealth Iunds. The frm advises on
asset allocation strategies, investment governance and pensions derisking
strategies. Candidates will have provided advice to medium or larger
pension funds or perhaps worked within a pension fund and have a desire
to move into the advisory arena. Actuarial or CFA qualifcations are
essential as well as strong communication and client development skills.
Contact anthony.chitnis@ipsgroup.co.uk
+44 207 481 8686
Corporate Pension Risk Specialists - Nationwide
Competitive Packages
As a result oI the defned beneft pensions market shrinking now
is a prime time for pensions candidates to look at broadening
their expertise by joining an organisation which is spending an
increasing amount of time advising clients on a range of issues
raised by a new pensions landscape. Economic volatility has
created a strong need for companies to place more emphasis
on how they manage the risks associated with their pension
arrangements and wider employee benefts. Individuals Irom a
consulting environment who have at least two years UK pensions
experience and a strong academic background and exam history
through to Senior Manager level grade will be of interest.
Contact simon.arthur@ipsgroup.co.uk
+44 207 481 8686
/RQGRQ2IFHIPS Group, Lloyd`s Avenue House, 6 Lloyd`s Avenue, London EC3N 3ES
7HOHSKRQH 020 7481 8686 Email: actuarialipsgroup.co.uk
/HHGV2IFHIPS Group, 8 St Paul`s Street, Leeds LS1 2LE
7HOHSKRQH0113 202 1577 Email: actuarialipsgroup.co.uk

ACT.04.13.049.indd 49 22/03/2013 11:47
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Appointments
www.theactuary.com
Senior Actuarial Analyst, Consulting
THB 200k per month + bonus Thailand
This global consultancy is offering an opportunity to progress your
career in an emerging market. You will be involved in multi-faceted
projects, co-ordinating with teams across Asia, travelling, dealing with
clients, gaining excellent internal and external training with full
support towards your studies. You will be a nearly qualified Actuary
with experience of financial reporting, capital management, solvency
and ideally knowledge of local regulations. Fluency in Thai is essential.
Health Actuary
Up to SGD 180k + bonus Singapore
A newly created role in the Singapore office of this world renowned
insurer. They are searching for an actuary with extensive group and
health insurance experience to develop this market. You will work with
Senior management to design and create products in this space. If you
are innovative, are looking to influence and generate new business
opportunities in Asia please apply today.
Head of Financial & Capital Management
Up to MYR 25k per month + benefits Malaysia
Global insurer with a strong presence in Asia seeks a Head of Financial
and Capital Management. You will have a wide range of actuarial skills
(ideally including Prophet) and be able to galvanise the team to
achieve key objectives in the reporting and analysis of IFRS, EEV,
Solvency II, Risk-Based Capital results. This role will suit a nearly /
newly qualified actuary looking to take a step up.
Insurance Advisory, Start-up
Dependent on Experience South East Asia
A global consultancy presents an exceptional opportunity to a
commercially astute Actuary with an Insurance Consulting background
to establish their business in Indonesia. You will be working with the
Senior Management developing new and existing clients in South East
Asia. To be considered you will be a qualified Life Actuary with
International experience ideally in Asia, looking to work on
multinational projects and travel extensively as part of your role.
Actuarial Systems Manager
Up to HKD 1m Package Hong Kong
Looking for a career where you will be respected as an individual and
valued for the contributions you make? Reporting directly to the line
manager, you will develop, maintain and provide technical support
across global and country led projects, respond to new initiatives,
deliver guidelines and enhance global processes as this international
firm looks to advance its market share in Asia.
Assistant Manager Actuarial Modelling Team
Up to HKD 800k Package Hong Kong
Global financial services firm seeks a nearly qualified actuary with
strong commercial acumen and extensive experience in Prophet to join
their rapidly growing Corporate Actuarial function in Hong Kong. You
will work across valuations (EV/MCEV), Financial reporting (IFRS),
ALM, capital management and model development and maintenance.
Overseas Opportunities
Clare Bethell, Senior Consultant - International clare@highfinancegroup.co.uk +44 (0) 207 337 8829
Collette Edwards, Consultant - Asia collette@highfinancegroup.co.uk +44 (0) 207 220 0174
Pensions & Investments | Non-Life | Life & HeaIth UK | Europe | Asia Pacic www.eamesconsulting.com
Contact
Rob Bulpitt
Head of Actuarial, Insurance
& Pensions Risk Management
020 7092 3237
Office Number
+44 (0)20 7092 3200
Rupert Rickard
Manager of Actuarial Non-Life and
Insurance Risk Management
020 7092 3219
For current opportunities please visit
www.eamesconsulting.com
Actuarial, CAT Modelling & Risk Management
The Actuarial division at Eames Consulting Group LLP is comprised of dedicated and experienced
Consultants who are industry specialists and who appreciate the importance of understanding the market
from a technical and commercial perspective. It is this level of knowledge and our consultative approach
that differentiates us from our competitors within the market. We listen to our clients and candidates
ensuring that we build a long term relationship based on mutual understanding and trust.
The individuals within this division focus on the mid to senior level actuarial market with designated consultants
specialising in the Non Life, Life & Health, and Pensions & Investments sectors. We are currently
working on a number of retained and exclusive mandates as well as various contingent assignments.
For further information regarding those opportunities mentioned here, or for a more informal
discussion about your career aspirations, please do not hesitate to contact us.
Insurance Solutions
Asset Manager
London
Pensions Consultant
Consultancy
Home Counties
Senior M&A Manager
Insurer
London
Client Relationship Manager
Asset Manager
London
Head of CAT
International Carrier
London
Director of Risk
Consultancy
London
ACT.04.13.050.indd 50 22/03/2013 09:10
51
www.theactuary.com
Non-Life Capital Modelling Actuary London
Up to 150K + Bonus + Benets
Leading global broker seeking an individual with capital
modelling experience to join their diverse and dynamic team. The
role will involve cutting edge work in a strategic, commercial and
corporate context. You will be involved in a tremendous variety
of assignments, helping clients improve the performance of their
business through capital modelling; a commercial outlook and
ability to devise workable and innovative solutions is essential.
Extensive experience with at least one capital modelling package,
as well as the implementation of a capital model in a hands-on
business environment is required.In return for this experience,
you will have the opportunity to become an integral part of a
growing team with a fantastic career path ahead of you. Excellent
communication skills; and experience of people, project and client
management are a pre-requisite for this role.
Ref: 19924
ALM Structuring Role London
60-100K Basic Salary + Market Leading Bonus Package
Interesting role within team that structures,
markets and implements ALM solutions for primarily
European Institutional clients in the Insurance and Pensions
sector.
The role will involve the structuring of tailored derivatives and
asset solutions for clients, with the opportunity to develop skills
in the marketing and implementation of these solutions.
Advice provided assimilates regulatory, actuarial and accounting
knowledge, derivatives and capital market expertise and
advanced stochastic modelling.
Ref: 19762
London Market Pricing Actuary London
90- 140K Basic Salary + Bonus + Benets
Leading global broker seeking experienced London Market
Pricing Actuary large commercial risks.
The role will include but will not be limited too;
Development of pricing models. This includes research
into pricing theory and benchmark data.
Large amounts of contact with internal and external
stakeholders clients, brokers and external advisors.
Support other members of the actuarial team on pricing
issues.
This opportunity is suitable for an individual seeking to work in
a non-traditional role, looking to open up a variety of different
career paths.
Ref: 19923
Senior Pensions & Investment Actuaries UK wide
100-200K Basic Salary + Long Term Incentive Packages
Our client is an award winning multinational pensions and
Investment consultancy, experiencing their record year for
revenue in the UK DB Pensions sector. Given their track record
of success, the organisation is now seeking to continue to invest
in successful business lines, as well as develop into broader
related sectors.
If you are an individual with an extensive client network
seeking a progressive and growing environment, or
an individual involved in leading and developing of new
service lines within the DB and DC Pensions and Investments
sphere, this could represent an interesting opportunity.
Ref: 19778
Actuarial Alternatives
To learn more about any of these roles / a condential career discussion please contact Ben Whalley Head of Actuarial.
Telephone: 0207 332 5883 Mobile: 07887 457 655
Email: actuarial@mansionhouse.co.uk Website: http://www.mansionhouse.co.uk
London ofce: Mansion House Actuarial, Pellipar House, 9 Cloak Lane, London, EC4R 2RU
ACT.04.13.051.indd 51 22/03/2013 09:11
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Appointments
www.theactuary.com

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ACT.04.13.052.indd 52 22/03/2013 09:12
53
www.theactuary.com
Research Programme Manager up to 42,000 + benets
You will be responsible for managing and driving the programme
of research across the Profession and in line with the corporate
plan. This will include, amongst others, management of knowledge
transfer initiatives to ensure maximum value is obtained from all
research initiatives, while meeting member needs.
Research Project Manager x 2 up to 32,000 + benets
You will be responsible for the day to day management of the
research projects. You will also have responsibility for project
management of journal production and of the research content of
thought leadership events.
Research Relationship Manager up to 42,000 + benets
You will build and maintain external relationships to maximise
the opportunities for the Professions research agenda. Your
responsibilities will be to liaise with and build strong relationships
with universities, funding councils, trade bodies, think tanks and
other third parties engaged in research.
Research and Knowledge Team - Edinburgh
With over 22,000 members around the world, the Institute and Faculty of Actuaries is
committed to playing a proactive role in all sectors our members work in.
A new Research and Knowledge Team will be established in Edinburgh to support this
objective, bringing new and exciting challenges to the remit of this area. The key purpose of this team will be to provide a
central point for research and thought leadership activities for the Institute and Faculty of Actuaries globally. This includes
the management and dissemination of research through events, publications, the media and websites to name a few.
To apply, or discuss these opportunities further, please contact Lindsey Boxall at
lindsey.boxall@edenscott.com or 0131 550 1122.
Closing date for applications is Friday 12 April 2013.
Eden Scott Ltd is working in partnership with The Institute and Faculty of Actuaries for these roles.
Any CVs sent directly will be forwarded to Eden Scott Ltd for review
Actuarial Business Leader
PwC Bermuda are looking for an exceptional candidate to lead our Actuarial and Insurance Management Solutions team, providing actuarial services to
our property and casualty (re)insurance clients. The successful candidate will continue to develop and grow the actuarial consulting practice, while also
supporting our market leading audit practice. This Director - level position would suit an ambitious, goal - oriented Actuary, looking for challenges in
an exciting and dynamic market.
To fulll this role, the Director will:
Lead sales by driving new business proposals and extending the range of
services currently provided to our (re)insurance clients, with an emphasis on
establishing long-term relationships.
Assist with the expansion of our existing client base by matching intellectual
capital generated within the PwC network to the issues faced by (re)insurance
groups based in or with signicant operation in Bermuda.
Serve as lead consultant on new and existing clients, partnering with other PwC
ofces and lines of business to deliver high quality, client-focused solutions.
Provide audit support services to a range of (re)insurers, from SEC registrants to
single parent captives.
Maintain knowledge of industry, market, and competition; anticipate external
market trends, internal and client needs.
Lead the business unit, including setting and delivering against nancial and
operational objectives.
Act as a mentor and coach, motivating a team to deliver a high standard of
work within given timeframes and budgets, thereby creating an environment
that encourages both individual and team accomplishments.
The successful candidate will have the following skills and experience:
Credentialed Fellow of the Institute of Actuaries or Casualty Actuarial Society
(or equivalent) with at least 12 15 years practicing experience.
Proven business development skills and excellence in building and maintaining
senior client relationships.
Demonstrated track record delivering high quality consulting and actuarial audit
support work to clients, leading to maintenance and growth of a client portfolio.
Knowledge of, experience in and access to a broad range of actuarial consulting
services.
Understanding and, ideally, recent experience of US GAAP for (re)insurance
companies.
Experience with leading teams and in people management, including coaching
and developing staff.
Excellent verbal and written communication skills in English.
Reserving or pricing experience across a wide range of lines of business, with
property catastrophe experience a signicant advantage.
Experience with the Bermuda regulatory market, or with similar regulators in
other jurisdictions would be an asset.
Please forward a detailed CV in condence to:
Johanna Elder, PricewaterhouseCoopers Human Capital Consulting Ltd
Email: johanna.elder@bm.pwc.com Tel: +1441 298 9703
ACT.04.13.053.indd 53 22/03/2013 09:13
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Appointments
www.theactuary.com
Guidance throughout
your career.
Pure Search Actuarial & Risk
Fure Secrch i: cn inlernclicnc| mu|li-ci:cip|incry recruilmenl frm. We prcvice ccpcLi|ily lhrcughcul
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www.pure:ecrch.ccm
ACT.04.13.054.indd 54 22/03/2013 09:14
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www.theactuary.com
STARBERMUDAFUTURES
www.staractuarial.com
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Paul Cook
SENIOR CONSULTANT
+44 7740 285 139
paul.cook@staractuarial.com
M
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Lance Randles MBA
ASSOCIATE DIRECTOR
+44 7889 007 861
lance.randles@staractuarial.com
M
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Global non-life consultancy is seeking a qualified actuary to
manage the technical delivery and reporting of high profile
projects. You will lead the dialogue with client project
sponsors and fully manage expectations of delivery, content,
timescales and cost as well as contribute significantly to
major consultancy projects as a subject matter expert.
LEAD THE DIALOGUE
BERMUDA
BMD $ excellent + bonus + benefits
Ref: Star1322
NON-LIFE
A fantastic opportunity for a qualified actuary to take a
leading role in insurance risk management for a worldwide
insurer. You will work directly with the local ERM team and
drive strategic decision making. In this exciting and
challenging role, you will have the chance to design and
execute processes to identify, quantify, monitor and report
on all aspects of insurance risk as well as steer the
production of the Economic Capital Model (ECM).
HEAD OF INSURANCE RISK
BERMUDA
Ref: Star1434
INVESTMENT
Our client is offering an incredible opportunity to a part
qualified life or non-life actuary with strong qualitative and
quantitative skills to join its ERM team. Working as part of
the Bermuda risk management and actuarial team, you will,
in collaboration with multi-functional international groups,
identify risks inherent in the business, collate key
management information, and calculate risk exposure
metrics to monitor and report on the Companys risk profile.
MOVE TO RISK
BERMUDA
Ref: Star1435
LIFE/NON-LIFE
This represents a great opportunity for a non-life actuary
with a proven history of business generation and of leading
a team/practice to make their mark in Bermuda. Providing
world class actuarial services to property and casualty
(re)insurance clients you will act as a mentor and coach,
motivating a team to deliver a high standard of work within
given timeframes and budgets. Experience of working
collaboratively with teams in other countries is desirable.
ACTUARIAL DIRECTOR
BERMUDA
Ref: Star1449
NON-LIFE
Louis Manson
MANAGING DIRECTOR
M
E
+44 7595 023 983
louis.manson@staractuarial.com
Antony Buxton FIA
MANAGING DIRECTOR
+44 7766 414 560
antony.buxton@staractuarial.com
M
E
Star Actuarial is far and away the best recruitment consultancy I have ever used.
You have been proactive and imaginative, bringing me lots of opportunities
including those in areas that I hadn't previously thought of exploring. You take care
over the details I appreciated the high standards of customer care and would
recommend your services unreservedly.
FIA 2001
ACT.04.13.055.indd 55 22/03/2013 10:09
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Appointments
www.theactuary.com
NON- LI FEFUTURES
Louis Manson
MANAGING DIRECTOR
M
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+44 7595 023 983
louis.manson@staractuarial.com
Irene Paterson FFA
PARTNER
M
E
+44 7545 424 206
irene.paterson@staractuarial.com
Antony Buxton FIA
MANAGING DIRECTOR
+44 7766 414 560
antony.buxton@staractuarial.com
M
E
Joanne Young
OPERATIONS DIRECTOR
M
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+44 7739 345 946
joanne.young@staractuarial.com
If you have a passion for applying your skills in projects
reaching beyond traditional actuarial boundaries, then this
role with a global consultancy will offer you just that. Projects
include M&A, Solvency II & Business Analytics.
BEYOND TRADITIONAL ACTUARIAL BOUNDARIES
LONDON excellent + bonus + benefits
Ref: Star1003
NON-LIFE
Our client has a new and challenging role in its actuarial audit
function offering an unparalleled view of a market leading
insurance company across multiple departments and
business areas.
HELICOPTER VIEW
SOUTH EAST up to 80k + bonus + benefits
Ref: Star1442
NON-LIFE
A role offering great variety within the commercial lines
business of a worldwide insurer. You will build technical
pricing models, perform pricing and reserving analysis and
review ICA results and outputs.
COMMERCIAL LINES PRICING, RESERVING & CAPITAL
LONDON up to 80k + bonus + benefits
Ref: Star1217
Our client is seeking a talented capital modelling actuary with
strong communication skills to take up a high profile and
challenging role with the opportunity to innovate and develop
new models and processes.
FROM THE GROUND UP
Ref: Star1376
NON-LIFE
Lead the development of the pricing and reserving
processes for an innovative company with great ambition.
An excellent opportunity for an outstanding candidate to
develop your technical and softer skills.
CUTTING EDGE TECHNIQUES
Ref: Star1312
NON-LIFE
A truly unique opportunity for a part-qualified actuary with
reinsurance experience to join a dynamic organisation on an
upward trajectory and work with some of the sharpest minds in
the industry.
ONCE IN A LIFETIME OPPORTUNITY
LONDON excellent basic + upside
Ref: Star1389
NON-LIFE
Seeking an experienced commercial lines pricing contractor
for 4-6 months. This London based role with an immediate
start requires regular liaison with underwriting and ideally
someone with management experience.
COMMERCIAL LINES PRICING CONTRACTOR
LONDON up to 1,000 per day
Ref: Star1450
NON-LIFE
Contribute to all aspects of capital modelling whilst building
your technical and soft skills within a high-performing team.
Join a company that offers unparalleled personal
development opportunities.
CAPITAL MODELLING ANALYST
Up to 60k + bonus + benefits
Ref: Star1401
MIDLANDS
NON-LIFE
Our client is seeking a talented, motivated part-qualified
non-life actuary to take up a key role within its pricing team.
Candidates from a reserving or capital modelling background
will be considered.
LONDON MARKET PRICING
LONDON circa 50k + bonus + benefits
Ref: Star1394
NON-LIFE
Leading insurer seeks a non-life actuarial expert to lead the
reserving process for its motor business. The successful
candidate will have the opportunity to get involved in a wide
range of special projects.
MOTOR LINES RESERVING MANAGER
Ref: Star1263
NON-LIFE
Growing insurance business seeks actuaries to provide
cutting-edge advice regarding its capital management and to
take the lead in the development of new reserving systems
and procedures.
RESERVING & CAPITAL ON THE COAST
SOUTH COAST up to 60k + bonus + benefits
Ref: Star1438 & Star1439
NON-LIFE
Our client seeks a technically proficient part-qualified or
qualified actuary to generate innovative solutions to complex
risks for a variety of clients, including banks and insurers.
Capital modelling experience desirable.
RISK CONSULTING
Ref: Star1186
NON-LIFE
ACT.04.13.056_057.indd 56 22/03/2013 10:10
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www.theactuary.com
LI FE PENSI ONS I NVESTMENTFUTURES
www.staractuarial.com
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Paul Cook
SENIOR CONSULTANT
+44 7740 285 139
paul.cook@staractuarial.com
M
E
Clare Roberts
SENIOR CONSULTANT
+44 7714 490 922
clare.roberts@staractuarial.com
M
E
Peter Baker
SENIOR CONSULTANT
+44 7860 602 586
peter.baker@staractuarial.com
M
E
Lance Randles MBA
ASSOCIATE DIRECTOR
+44 7889 007 861
lance.randles@staractuarial.com
M
E
If you are a part qualified actuary with a good understanding
of the changing life insurance market and a thirst for providing
technical expertise and advice in a specialist actuarial area,
then this is the perfect role for you.
ANALYSE LIFE BY THE SEA
SOUTH COAST up to 50k + bonus + benefits
Ref: Star1445
LIFE
A unique and challenging role which sits within the Financial
Reporting team. This role would suit someone who has highly
developed technical capability and proven leadership and
communication skills.
ACTUARIAL REPORTING MANAGER
BRISTOL up to 80k + bonus + benefits
Ref: Star1451
LIFE
Seeking a part-qualified or qualified actuary with excellent
technical skills and a focused commercial attitude to provide
strategic advice to corporates on all aspects of designing,
operating & financing pension schemes.
STRATEGIC CORPORATE ADVISOR
BIRMINGHAM up to 75k + bonus + benefits
Ref: Star1410
PENSIONS
Due to business growth our client seeks an investment
actuary with a strong technical and modelling background.
Good communication skills are required to present at client
meetings. Banking experience desirable.
INVESTMENT ACTUARY
Ref: Star1441
INVESTMENT
Start-up life business is seeking a high calibre actuary to
provide strategic support in the development of its business
model. The successful candidate will play a key role in
establishing pricing processes.
START-UP LIFE BUSINESS
LOCATION UPON APPLICATION up to 130k + benefits
Ref: Star1196
LIFE
Our client seeks a high calibre investment consultant with the
knowledge and skills to take its successful practice to the next
level. You will develop new and existing clients and grow the
team and its capabilities.
HEAD OF INVESTMENT CONSULTING
Ref: Star1368
up to 65k + bonus + benefits
A fantastic opportunity for a high calibre actuary to take the
lead on regulatory reporting for its international business,
establishing relationships with branch Appointed Actuaries
and Regional Compliance Officers.
REGULATORY REPORTING ACTUARY
SOUTH EAST
Ref: Star1431
LIFE
Looking for a new challenge? Our client is seeking commercial
pensions actuaries with excellent business development skills
to set up new offices under an established brand.
REGIONAL NEW BUSINESS PROPOSITION
NATIONWIDE excellent + bonus + benefits
Ref: Star1348
PENSIONS
Leading asset management company has a unique
opportunity for an actuary with ALM experience to join its
cutting-edge team.
ASSET MANAGER
Ref: Star1440
INVESTMENT
Seeking a part qualified or qualified actuarial modeller to make
recommendations for the specification, building, testing and
implementation of systems with appropriate performance,
controls and documentation.
MODELLING EXPERTISE
BRISTOL up to 65k + bonus + benets
Ref: Star1432
LIFE
We have a diverse and exciting opportunity for a qualified
actuary to lead, manage, motivate and develop an actuarial
modelling team, creating and maintaining a strategic
modelling platform to meet business needs.
HEAD OF ACTUARIAL MODELLING
BRISTOL up to 115k + bonus + benefits
Ref: Star1433
LIFE
Take this opportunity to develop cutting-edge pension
scheme solutions. Specialist risk management consultancy
seeks a driven candidate to join its growing team to lead and
manage client relationships.
CLIENT RELATIONS
Ref: Star1412
INVESTMENT
ACT.04.13.056_057.indd 57 22/03/2013 10:10
58
Appointments
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Fresh Thinking
ACT.04.13.058.indd 58 22/03/2013 09:16
59
www.theactuary.com
The Insurance and Pensions Authority is a Statutory Board responsible for regulating the Isle of Mans insurance and pensions sector, a
key contributor to the economic success and prole of the Island. Over the next three years the Authority intends to signicantly update
its regulatory framework for the insurance sector, taking into account the revised standards set out by the International Association of
Insurance Supervisors in its Insurance Core Principles. This work will also have regard to developments in relation to the EUs Solvency
II framework. This gives rise to the opportunity for two full time actuarial professionals to join the Authoritys team, reporting to the
Authoritys Senior Actuary, to assist with the development and implementation of this framework, and ongoing supervision under the
framework once it is in place.
These roles will be varied and challenging and provide an excellent opportunity to broaden knowledge, acquire new skills and contribute
to the further development of the Islands insurance sector. Providing exciting opportunities for career development, salary will be
commensurate with experience.
Responsibilities include:
Assisting with developing and drafting a revised regulatory
framework in the areas of the economic balance sheet, risk-
based capital (standard formula and internal model
approaches) and enterprise risk management.
Consulting with regulated entities on the development and
implementation of the framework.
Assisting in the design and review of quantitative impact
studies.
Assisting with the review and approval of applications to
use internal models.
Input to the ongoing supervision of regulated entities,
under the current and revised frameworks.
Experience and attributes required:
Personable, outgoing and discreet.
Relevant life assurance industry experience, particularly
in the areas of risk-based capital, ERM and Solvency II.
Non-life experience would also be benecial.
Ideally, the Actuary should be a recently qualied
actuary, and the Senior Actuarial Student should be close
to qualication.
Excellent report writing and communication skills.
Well organised and able to deal with complex and
sensitive issues.
Able and willing to work in small multidisciplinary teams.
This position is not a Civil Service appointment. Please apply by 30th April 2013, using the Authoritys standard application
form available on our website at www.ipa.im/careers.xml and marked Stafng in condence to Senior Actuary,
Insurance and Pensions Authority, Ground Floor, Finch Hill House, Bucks Road, Douglas, Isle of Man, IM1 3DF or email
neil.taverner@ipa.gov.im, from whom further information can be obtained.
Actuary and Senior Actuarial Student
Contact Parvinder Matharu
Newton Recruitment
t +44(0)1689 862937
e parvinder@newtonrecruitment.com
w www.newtonrecruitment.com
Senior Client Relationship Executive
Asset Management, London
40k to 60k + Bonus & Benets
This is a unique opportunity to work for a leading asset management rm,
where youll be able to apply your excellent communication skills. Candidates
will need to have a pensions or investment consultancy background, and those
who have given up the actuarial exams or have taken the CFA exams will be
considered. Principal accountabilities in this role include:
Provide an exceptional level of relationship and sales support service
to internal and external clients, focusing on a portfolio of complex
clients who would typically invest in Active Fixed Income and LDI
strategies.
Understand and be able to discuss derivatives products and strategic
modelling with key clients.
Own and co-ordinate the successful resolution of client enquiries from
start to nish, liaising and utilising expertise from around the business
in order to meet deadlines.
Provide high level technical support, demonstrating an understanding
of a clients decision making process and long term objectives. Be
able to answer complex queries as well as identify business
opportunities and threats.
Demonstrate a high level of technical knowledge. Develop and maintain
knowledge of the current investment market, economic issues, enabling
you to discuss solutions with clients and consultants.
The missing
piece to your
career puzzle
To register for our
Jobs by email service
simply go to
theactuaryjobs.com
ACT.04.13.059.indd 59 22/03/2013 09:18
United Kingdom
Contracts - GI
General Insurance
London Market Reserving Analyst
Ben Pitt
London
55,000 + Bonus + Benets
A leading London Market insurance business is looking for a part
qualied Actuary to join their growing reserving team. You will
be responsible for the continued development of the more junior
team members as well as furthering your own skill set with excel-
lent hands on training. No prior reserving experience is necessary.
Pricing Actuary
Rick Davis
London (City)
A unique London Market pricing opportunity within a long-estab-
lished Lloyds Syndicate. Working with the Group Head of Pric-
ing, you will assist in developing new pricing techniques across
all Reinsurance and direct insurance lines of business. You will
also complete case pricing and rate review projects and manage
a junior team member. Previous pricing experience is essential.
Head of Pricing & Reserving
Paul Francis
London (City)
A hugely innovative Lloyds syndicate are looking to hire a quali-
ed Actuary to lead their Reserving & Pricing function. Reporting
to the board, you will be responsible for overseeing the work of
a team of part-qualied and recently qualied actuaries. You will
also carry out complex pricing projects and work closely with all
underwriting teams across the business. Requires excellent com-
munication skills.
Pricing Manager
Sarah Robins
South East
I am recruiting for a Pricing Manger for a leading insurer. You must
demonstrate strong technical pricing skills preferably in the motor
arena. This would suit someone looking to enhance their career in
a fast moving & highly supportive organisation. You do not need
to be an Actuary.
Head of Economic Capital
Sarah Robins
South East
I am recruiting for a Head of Capital position with a leading re-
tail insurer. You will be the business lead for the capital function,
ensuring the development, maintenance and governance of the
capital model. It is desirable that you are a qualied Actuary with
signicant capital experience. This is a high prole role in a fast
moving environment.
Reinsurance Pricing - Actuarial Analyst
Richard Howard
London
35,000 - 55,000 + Bonus + Benets
We are working on behalf of a global speciality reinsurer to help
them recruit an actuarial analyst to join their established team in
London. They are looking for an excellent understanding of insur-
ance products and markets, a numerate qualication and experi-
ence of working within insurance or reinsurance modelling.
Actuarial Analyst - Capital Modelling
Richard Howard
London
45,000 - 65,000 + Bonus + Benets
Exclusive mandate to recruit for this leading Lloyds syndicate and
managing agent, within their capital modelling team. Reporting to
the capital modelling manager you will be responsible for statisti-
cal analysis on capital modelling projects. They are looking for
experience within capital modelling and ideally Remetrica and/or
VBA.
Reinsurance Actuary
Rick Davis
London (City)
A leading London Market insurance business requires an expe-
rienced GI Actuary to lead their Reinsurance actuarial team. You
will manage a team of analysts and provide reserving, pricing and
capital services to a highly successful team of underwriters. Expe-
rience in reinsurance is required along with the ability to manage a
team of student actuaries and present at board level.
Senior Reserving Actuary
Stewart Cherry
London
800 - 1000/day - 3-6 Months
A Lloyds syndicate is looking for an experienced qualied Reserv-
ing Actuary 3-6 month contract.
ReMetrica Modeller
Rob Bentham
London (City)
Up to 800/day - 6 Months
A Lloyds syndicate is looking for a ReMetrica Modeller to work on
the next phase of their Solvency II programme.
Senior Pricing
Stewart Cherry
London
800/day - 6 Months
A Senior Pricing Actuary with London Market experience is re-
quired.
Igloo Actuary
Stewart Cherry
London
900/day - 6 Months
A Lloyds syndicate is looking for a Capital Modelling Actuary, ide-
ally with Igloo for a 6 month contract.
Pricing Actuary
Rob Bentham
London (City)
A Lloyds syndicate is looking for an experienced Pricing Actuary
to join their team for an initial 6 month role.
Company Actuary
Stewart Cherry
London, South East
700/day - 4-6 Months
A leading GI Retail business has a requirement for nearly/newly
qualied Actuary for a 4-6 month contract.
Paul Francis 0207 649 9469
Rick Davis 0207 649 9353
Sarah Robins 0207 310 8552
Ben Pitt 0207 310 8719
Richard Howard 0207 649 9356
Ben
General Insurance - UK
Email actuary@ojassociates.com
Web www.ojassociates.com
General Contact Details
Rob Bentham 0207 649 9351
Stewart Cherry 0207 310 8651

Contracts - GI - UK
Please contact one of the team for further information on any of the opportunities above.
ACT.04.13.060_61.indd 60 22/03/2013 09:00
United Kingdom
Contracts - Life
Life Insurance
Risk Actuary
Clare Nash
London
90,000 + Market Leading Package
A global player seeks a qualied actuary to join a successful team.
You will enjoy working in a multi-disciplinary team and dealing with
senior stakeholders on an international basis. The ideal candidate
will have a varied background in terms of technical ability and will
excel working in a project based environment.
Pricing Actuary
Rachel Kelly
South East
Up to 70,000 + Bonus + Benets
My client seeks a newly qualied actuary to join their successful
pricing team. You will work on a range of pricing and experience
analysis activities and enjoy the opportunity to inuence key com-
mercial decisions. Previous pricing experience is an advantage
but not a pre-requisite.
Qualied Reporting Manager
David Parker
South
A leading UK insurer requires a qualied actuary to take owner-
ship of one of the reporting teams. Working alongside the Head
of, you will have developed management/coaching experience
previously and have a good understanding of current regulatory
and capital reporting. Strong communication skills and technical
capabilities are a must.
Research & Development Actuary
Clare Nash
London
95,000 + Market Leading Package
Are you a pricing Actuary potentially considering new options?
I am recruiting for an unusual appointment in the City. This is a
varied role within a growing team. My client seeks a qualied in-
dividual (ideally with PMI experience) to lead a variety of different
projects. The role requires the individual to have an innovative air
to their prole as well as the propensity to acquire new skills.
Head of Actuarial Modelling
Mehwish Raza
South West
Senior Appointment: A high prole life insurance business is re-
cruiting for a key role. The position is for a H/O Actuarial Model-
ling, managing a large team and providing strategic direction. The
ideal candidate will have experience in a similar role with strong
team building capability and excellent communication skills. Ex-
perience in Prophet or MoSes is required although the role is more
managerial than hands on.
Senior Systems Actuary
David Parker
South East
Are you a senior Life Actuary with strong systems development
and coding experience? Im currently working with two business-
es that are looking to recruit both technically strong and com-
mercial specialists for in house projects, lead management roles
and consulting opportunities. Prophet, MoSes or Algo experience
is essential.
Risk & Capital Modelling
Rachel Kelly
South East
A well-known organisation requires nearly/newly qualied Actuar-
ies to work on a variety of capital and risk modelling projects. The
successful candidate will be technically strong with good com-
munication skills and previous risk experience. Excellent career
progression on offer.
Capital Projects Actuary
Mehwish Raza
London (City)
A prestigious insurance business is seeking a capital projects Ac-
tuary to join their international team. Candidates from a range of
backgrounds will be considered including skills such as SII, Re-
porting, ICA, GLM, SAS, Data Warehousing and Modelling. If you
are looking for a new challenge, this would be a great opportunity
to explore.
Senior Prophet Modeller - ALS
Kaylash Kukadia
North
800/day - 1300/day - 6-12 Months
Senior Prophet ALS Modeller with signicant experience of Valua-
tions, Stresses and Projections.
MoSes Modeller
Rob Bentham
London
Up to 900/day - 3-6 Months
Our client, a market leading insurer, is looking to acquire an expe-
rienced MoSes modeller for an initial 3-6 months.
Rob Bentham
Midlands
Our client is looking for a Solvency II Documentation Actuary to
join them for an initial 6 month project.
Reporting Actuary
Kaylash Kukadia
South West
A well respected insurer is looking for a qualied reporting actuary
to join their team. The role will be MCEV focussed.
Pricing Actuary
Rob Bentham
South West
Our client is looking for a qualied Pricing Actuary to join them for
an initial 3 month project.
ICA Actuary
Kaylash Kukadia
South West
A well known insurer is looking to bring on a qualied Actuary for
an initial 6 months to focus on their ICA work.
Clare Nash 0207 649 9350
David Parker 0207 310 8649
Mehwish Raza 0207 117 6159
Rachel Kelly 0207 310 8579

Life Insurance - UK Contracts - Life - UK
Rob Bentham 0207 649 9351
Kaylash Kukadia 0207 310 8581

Email actuary@ojassociates.com
Web www.ojassociates.com
General Contact Details
Solvency II Documentation Actuary
ACT.04.13.060_61.indd 61 22/03/2013 09:01
dgsdfsfsdfsgsgsgsdgsdgsdgsdgsdgsd
Asia
Life - Head of Reporting
Alex Ince
Thailand
Competitive
Multinational insurer is seeking a candidate to head up their em-
bedded value reporting team in Bangkok. Great opportunity for a
candidate to step up into a management position. Seeking newly
qualied candidates with experience in a valuations team and ide-
ally some supervisory experience. English language skills are all
that is needed to work in the fastest growing market in Asia.
Life - Investment Actuary
Gary Rushton
Hong Kong
Competitive
A global leader within the nancial services sector is currently
looking for an experienced investments Actuary to provide capital
optimisation solutions and focus on developing their asset val-
ues and solvency margins. The successful candidate will have
extensive post qualication experience working within investment
management and/or ALM space. Strong communications skills a
must. English speaking.
Life - Country Manager - Life Head Ofce
Jonny Plews
Hong Kong
Competitive
European insurer seeks an experienced actuary (8-14 years) to
work in the APAC HQ overseeing all actuarial duties. You will act
as the point of contact to one of the countries across Asia, though
your team will analyse the strategy of actuarial work across the
entire APAC region. We require a European skilled actuary (cultur-
ally and technically). Only English required.
Life - UK Actuary
Jonny Plews
Hong Kong
Competitive
European insurer seeks an FIA qualied/student to work in its
APAC head ofce. Role is varied; SII, Capital & Market Risk. A
perfect role for a UK resident to move to Asia as company culture
and work content will be similar to home. You must be uent in
English to communicate regularly with group head ofce.
GI - RI Pricing Actuary
Toby Weston
Hong Kong
Competitive
Working across APAC from the Singapore regional ofce, we are
looking for an Actuary with deep experience in pricing treaty casu-
alty lines of business and a desire to move into a more commercial
position. This role is working in a very client facing team struc-
turing multi-line, multi-year products to assist clients in effective
capital management strategies. Fellowship and an Asian language
are strongly preferred.
GI - Capital Modelling Actuary
Toby Weston
Hong Kong
Competitive
Our client is a leading multinational re-insurer who are looking for
a technically strong Actuary to work as their in-house capital mod-
elling expert. Reporting into the Chief Actuary and working exten-
sively with senior management we are looking for someone with
strong technical skills and excellent communication in English to
join this fast growing organisation in a crucial role for their risk
management function.
Non - Life Reserving Actuary
Ben Moses
Switzerland
Up to CHF1250/day - 6-9 Months
Reserving of multiple business lines for international insurer. BAU
and Solvency II experience desirable.
Prophet/MoSes developers
Helger Wiese
The Netherlands
Up to 1000/day - 3 Months plus extensions
Demand for both MoSes and Prophet developers in Dutch market.
Ideally Dutch speaking.
GI Pricing Actuary
Manuel Lovell
Southern Germany
60,000 - 75,000 + Bonus
This well-regarded insurance name is looking for an Actuary to
join their Pricing & Product Development team. Minimum of 4
years experience and a strong background in Non-Motor prod-
ucts across the European markets with the ability to work inde-
pendently. Must be uent in English and German.
Consultant jnr/mid/sen
Niels van Nieuwkerk
Caribbean
40,000 - 80,000
International consultancy is seeking to recruit consultants for their
business in the Caribbean. The consultants will advise insurance
companies and Pension funds on a broad range of actuarial top-
ics. Dutch market knowledge required.
Reinsurance Pricing - Agriculture
Audrey Dresen
Zurich
CHF120,000 - CHF150,000
Successful team of Agriculture Underwriters is looking for a Pric-
ing Actuary to support their growing business. You have ideally
gained a few years experience in Agricultural pricing in a Rein-
surance environment. Exceptional communication skills and un-
derstanding of the business as well as sound IT skills and tool
development experience are a denite advantage.
General Insurance Actuaries
Patrick McMahon
Dublin, Ireland
60,000 - 120,000 + Bonus + Benets
I have a number of excellent opportunities in Dublin for actuaries
with GI experience. The roles are across Reserving, Pricing, SII
and Advisory work and range from P/Q to experienced hires. The
roles offer the opportunity to progress your career and obtain new
skills and experiences.
SII Validation Ofcer
Laurence Baken
Brussels
50,000 - 60,000
An excellent opportunity for a validation expert to validate SII cap-
ital models and technical provisions of a global European Insurer
on a group level, as well as presenting conclusions to the Model
board level at Group and local.
Life - ALM/Capital - Special Projects
Alex Ince
Hong Kong
Competitive
Hugely successful global insurer is seeking a candidate to work
in a special projects role in the ALM/Capital team. Successful
candidates will have experience of working with investments and
managing risk. Only clear communicators will be considered as
this is a regional role. Mandarin and Cantonese considered an ad-
vantage. This is a great opportunity to broaden your skillset into
new areas.
Europe
Jonny Plews +852 5804 9200
Alex Ince +852 5804 9224
Gary Rushton +852 5804 9223
Asia
Toby Weston +852 5804 9042
Chris Lee +852 5804 9253
Philip Chau +852 5804 9287
ACT.04.13.062_63.indd 62 22/03/2013 09:00
Benjamin Moses +49 (0)89 2206 1068
Helger Wiese +31 (0)20 262 0280
Emina Biscevic +49 (0)89 3803 8965
Laurence Baken +32 (0) 2 401 2249
Patrick McMahon +353 (0)1 685 2413
Europe
Audrey Dresen +41 (0) 43 508 0444
Julien Fabius +31 (0)20 716 8450
Please contact one of the team for further
information on any of the opportunities above.
Featured Job
Life - Clare Nash
Clare joined OJ in 2007
and is now head of
the Life & Investments
Actuarial team.
clare.nash@ojassociates.com
+44 (0)207 649 9350
Asia - Jonny Plews
Jonny joined OJ in 2004
and is now responsible
for our offering in Asia.
jonny.plews@ojassociates.com
+852 5804 9200
Europe - Audrey Dresen
Audrey is our specialist
recruiter for Switzerland
covering Actuarial, Risk
& Compliance.
audrey.dresen@ojassociates.com
+41 (0) 43 508 0444
Europe - Julien Fabius
Julien manages our
Benelux team recruiting
across Life, GI, Pen-
sions and Investments.
julien.fabius@ojassociates.com
+32 (0)2 888 6051
Non-Life - Paul Francis
Paul joined OJ in 2007
and now heads up GI
Actuarial, Risk & Com-
pliance.
paul.francis@ojassociates.com
+44 (0)207 649 9469
As we move into the second quarter of the year, habitually we see more interest from the market in what
businesses are looking to recruit for. Bonuses have been paid, reporting seasons end, students sit their
exams and rotate into new teams, promotions occur essentially we see a lot of movement in the market
at this time.

Quarter two is historically one of the busiest times of the year and 2013 is no exception!
There have been several factors which have made the market a little more considered in their approach
to recruitment in Q1, predominantly delays in Solvency II. Actuaries are still very much in demand, however!
We have a wealth of new appointments on the horizon, quite often on an exclusive basis. The market is ever
changing and if you are considering a new opportunity or if you want to understand what will set you aside
from other individuals, we are more than happy to have a condential discussion with you. Similarly, if you
are a hiring manager and would like some intelligence on salaries or market trends, we can give you a com-
prehensive overview.
If you would like a more general discussion, please contact any of the Life team:
Clare Nash 0207 649 9350
David Parker 0207 310 8649
Rachel Kelly 0207 310 8759
Mehwish Raza 0207 117 6159
A more in-depth overview of our appointments can be found on our website: - www.ojassociates.com
Key Contacts
Whats happening in the Life Market? Opportunities moving into Q2...
By Clare Nash
Tel: +44 (0)207 310 8649
Email: david.parker@ojassociates.com
David joined Oliver James Associates with six years senior sales ex-
perience working with some of the worlds leading nancial organ-
isations. Since joining the Life and Investments actuarial team over
three years ago, his focus has been on protection and investment
hires from part-qualied through to senior appointments with lead-
ing life insurers, reinsurers, consultancies and regulators.
Consultant - Life & Investments Actuarial
David Parker
Commercial Development Actuary - Life
David Parker
London
Exclusive Appointment! One of the worlds prestigious insurance and investments groups is looking to con-
tinue their UK growth with the acquisition of a qualied actuary for their Head Ofce. This FTSE 100 company
has created an opportunity for a commercial pricing or product development actuary to take a step up into
an autonomous position where you will take ownership for new product development initiatives and drive
them through to completion.
A key element to this role is the ability to interact with senior stakeholders as well as immediate team mem-
bers, building long-term, mutually benecial relationships. Bridging the gap between actuarial and under-
writing you will have strong industry awareness and be able to communicate complex quantications while
retaining a commercially focused outlook.
Leading project work
streams, this opportunity
will best suit a career-
minded individual looking
for more control in an
award winning business.
Exceptional fast-track
career progression for the
right individual.
ACT.04.13.062_63.indd 63 22/03/2013 09:00
The Actuarial Recruitment Company
This well established life insurer is looking for a recently or more
experienced qualified actuary to join their team. As part of an
expansive role, the successful candidate will have prior pricing
experience and will be involved in all aspects of the pricing cycle
as well as providing direction to other pricing team members.
Excellent communication skills will be required since the role involves
significant interaction with non actuaries in other business areas.
Ref: ARC26214
Pricing Actuary Life
London Up to 80K
This London Market operation is looking for a part qualified actuary
to be involved with reserving, pricing support, involvement in the
internal capital model and business planning. There will be alot of
interaction with senior management and other areas of the business.
Candidates with an excellent academic record and progressing
well with the actuarial exams should apply. The ability to develop
technical solutions for the business without extensive guidance from
above will be important. Ref: ARC26212
Actuarial Analyst General Insurance
London Circa 50K
This general insurer seeks an actuarial student making good progress
with the exams to join the reserving and capital team. The work
will be varied with plenty of interaction across other parts of the
business covering non life commercial lines products. Candidates
need at least 2 years experience and good candidates with actuarial
experience who want to move to GI will also be considered. A
combination of good technical and strong communication skills are
required. Ref: ARC26213
Actuarial Analyst Life/GI
South Attractive
This role working for a specialist P&C (re)insurer will be involved
in the development and running of the companys internal capital
model. Initially the role will involve the design and build of a new
Remetrica model to replace the existing capital model. The client
is looking for an individual with excellent technical skills as well as
previous experience in capital work and a sound knowledge of
Solvency II. A Remetrica background would be preferred for the
role. Ref: ARC26211
Capital Actuary General Insurance
London To 85K
Call us anytime including evenings and weekends on 020 7717 9705 or email enquiries@the-arc.co.uk
General Insurance Andy Clark BSc FIA 0781 333 7891 andy@the-arc.co.uk
General Insurance & Contracts Roger Massey BSc MBA FIA 0781 398 9016 roger@the-arc.co.uk
New Entrant (All) & Life/Pensions Chris Cannon BA CFI DAT 0771 122 8449 chris@the-arc.co.uk
The Actuarial Recruitment Company is an employment agency
www.the-arc.co.uk
A fresh approach
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APRIL 2013

LETTER OF THE MONTH

GENERAL INSURANCE NEWS ROUND-UP

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